38 1GM Thursday October 15 2020 | the times
Business
A Hong Kong-based hedge fund has
been fined almost £900,000 after
failing to disclose its record-breaking
short position in Premier Oil.
Asia Research and Capital Man-
agement should have made 155 notifi-
cations to the Financial Conduct
Authority over its short position in the
troubled oil producer between Feb-
ruary 2017 and July 2019.
Its ultimate net short position of
16.85 per cent of Premier’s shares was
“the largest net short position ever
held” in a company listed on the
London Stock Exchange, the authority
said yesterday.
The hedge fund said that it had not
Blackrock boost confirms
electric van maker’s arrival
A British technology company that is
developing electric vans for Royal Mail
has received a $118 million cash injec-
tion from the world’s largest money
manager.
Arrival, which is also developing
zero-emission buses, said that the
investment from Blackrock would
help it to expand its network of “micro-
factories” in Europe and the United
States.
Investors are betting heavily that
battery-powered cars will quickly
replace their fossil-fuel equivalents.
The market capitalisation of Tesla,
Elon Musk’s flag-bearer for the sector,
has soared more than ninefold in the
past 12 months to nearly $420 billion,
making it more valuable than Toyota,
Ford and Volkswagen combined.
Arrival has its headquarters in
London, a microfactory in Bicester,
Oxfordshire, and research and devel-
opment facilities in nearby Reading
and Banbury.
The loss-making company employs
about 1,200 people in half-a-dozen
countries. It was founded five years ago
by Denis Sverdlov, 42, a Russian former
telecoms entrepreneur who served as
the country’s telecoms minister.
Blackrock’s investment maintains
Arrival’s valuation at €3.3 billion. The
company achieved that mark this year
when Hyundai and Kia, the South
Korean carmakers, together put
€100 million into the company for a
3 per cent stake.
Arrival claims that it can develop and
build new electric vehicles at a fraction
of the cost of traditional car manufac-
turers through its network of micro-
factories.
These plants use a “cell-based” robot-
ic assembly system instead of a tradi-
tional production line, allowing them
to build any vehicle in Arrival’s
portfolio, according to the com-
pany. Vehicles are built on top
of flat, modular “skateboard”
bases containing the batteries
and drivetrain.
This week Arrival said that
it was investing $46 million to
build a microfactory in SouthCarolina. The American facility is
expected to go online in the second
quarter of next year.
Arrival claims that its electric vans,
priced at about £36,000, can travel 200
miles on a single charge.
The company is aiming to bring the
cost down to match that of a £25,000
diesel Mercedes-Benz Sprinter. It aims
to use its microfactories to produce as
many as 10,000 vans a year.
Arrival is testing its vans with Royal
Mail, UPS and DHL, the giant delivery
businesses, among others. UPS hasalready ordered 10,000 of the vans with
an option to purchase a further 10,000
in 2023 in a deal worth as much as
€800 million. The UPS vans are in the
prototype stage, but Arrival aims to de-
liver finished models to the American
courier over the next four years.
The New York-based Blackrock has
about $7.8 trillion of assets under man-
agement. It is also an investor in Rivian,
an electric van maker that aims to
supply 100,000 vehicles to Amazon, the
ecommerce group, to form the back-
bone of its home delivery fleet. In July
this year, Blackrock made a further
undisclosed investment in Rivian.
Blackrock’s cash infusion is a boost
for Britain’s carmaking industry, which
has struggled to attract investment
since the Brexit referendum in 2016.
Arrival’s Bicester factory is slated to
begin van production next year.
Its new American factory will aim
to make up to 1,000 electric buses a
year when production begins late
next year.
Mr Sverdlov set up Arrival using
money he made from the sale of Yota,
his Russian mobile phone company,
in 2012. It is not known how much he
made from the sale.James Dean US Business Editor
Hedge fund fined for not disclosing Premier short
known that it was supposed to make the
disclosures. However, even when it
realised that it may have broken the
rules, it took another month to alert the
regulator.
A short-seller takes a bet on a
company in which it stands to gain from
a fall in its share price. British rules re-
quire traders to report to the FCA any
net short position equivalent to at least
0.2 per cent of a company’s shares and
to disclose publicly any net short of
more than 0.5 per cent, as well as to
disclose increases to the position there-
after.
The fund, which declined to com-
ment on the fine, was founded in 2011 by
Alp Ercil, former Asia head of Perry
Capital, an American hedge fund. Itspecialises in distressed assets and has
$3.5 billion in assets under manage-
ment.
Simon Morris, a financial services
partner at CMS, the law firm, said it was
the first time that the regulator had
fined a company for non-reporting of
shorted positions.
Asia Research and Capital Man-
agement shot to prominence in
December when its short position in
Premier was disclosed. It was also Pre-
mier’s largest creditor, with about 15 per
cent of its debt, and had taken out the
short position to hedge its exposure.
It then entered a high-profile spat
with Premier after the producer struck
a deal to buy oilfields from BP, which
the hedge fund opposed. The two sideseventually came to an agreement this
summer for the hedge fund to support
a revised deal with BP and reduce its
short position.
However, last week, amid a struggle
to fund the acquisition, Premier aban-
doned the BP deal in favour of a reverse
takeover by Chrysaor. Creditors are set
to lose about 20 per cent of the value of
their loans.
A source close to Asia Research and
Capital Management said that the
short position had helped to mitigate
the impairment of the debt.
The FCA said it would have imposed
a fine of £1.25 million but that this had
been reduced to £873,118 because the
fund had agreed to resolve the matter
and therefore qualified for a discount.Emily Gosden Energy Editor
Arrival’s electric vans are
being tested by UPS, the
global delivery and
logistics companyBarratt rises
high on the
back of stamp
duty holiday