Charterhouse stakeholder to appeal in valuation suit

The ruling comes as Charterhouse looks to raise its successor fund later this year.

Former Charterhouse director Geoffrey Arbuthnott is preparing to appeal a court ruling announced Thursday that found in favour of Charterhouse, according to a source familiar with the matter.

Arbuthnott, a director at Charterhouse from June 2001 until January 2008, alleged that Charterhouse shareholders tried to force him to sell his stake in the firm for £1.5 million in November 2011, which he claimed was far too low. Arbuthnott still owns 8.91 percent in the holding company of Charterhouse and claimed his stake was worth £8 million.

However, the judge in the Chancery Division of London’s High Court rejected his claims and said there “there had been no oral agreement and no unfair prejudice”.

Herbert Smith Freehills, which represents Arbuthnott, declined to comment.

In an emailed statement, Charterhouse said the firm noted “that the judge rejected all of Mr Arbuthnott's complaints”.

“The evidence has shown that he was not unfairly treated and that Charterhouse is entitled to exercise its rights to acquire his shares at the price accepted by all other shareholders. Mr Arbuthnott's attempts to secure an unrealistic valuation for his shares have failed and for us the matter is now closed,” Charterhouse said. The firm declined to comment further.

The case, which lasted a few weeks, has lifted the lid on Charterhouse, which despite being one of the oldest private equity firms in the world, remains a very private firm and discloses very little information about its investment strategy.

Arbuthnott’s witness statement revealed how the succession of Gordon Bonnyman, who led the firm between 1990 and 2011, when Lionel Giacomotto became managing partner, was handled.

When fundraising for CCP VII, Charterhouse’s €4 billion 2006-vintage fund, Bonnyman named Arbuthnott as its successor if unforeseen circumstances caused him to retire, Arbuthnott claimed.

The prolonging of the legal battle would be unwelcome to Charterhouse, which is gearing up to raise between approximately €3 billion to €4 billion for Charterhouse Capital Partners X later this year, according to sources familiar with the matter.