Allison McIntyre Shure v Capvest Ltd

Hearing date 13 December 2023

Approved Judgment

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

This Judgment was handed down remotely at 10am on Thursday 7 March 2024. It was sent by email to the parties' legal representatives and to National Archives

By a Part 8 claim issued on 3 February 2023 the Claimants seek (i) declaratory relief as to the true interpretation of section 2(d) of a letter agreement as amended and restated for the second time on 21 September 2012 (“the Letter Agreement”) and (ii) orders for the provision of information and documents in the form of Annex 3 to the Details of Claim (the “Information and Disclosure Requests”).

The Claimants are and were at all material times the trustees of the Shure Marital Trust (“the Trust”). The Trust was formed in January 2012 following the death of Randl. L. Shure (“Mr Shure”). Mr Shure was the co-founding partner of the CapVest private equity enterprise, together with Mr Seamus FitzPatrick. The First Claimant is the widow of Mr Shure. The First Claimant and her children are stated in the Details of Claim to be the only beneficiaries of the Trust.

The First Defendant, CapVest Limited is a private limited company registered in England and Wales.

The First Defendant was pursuant to an Investment Advisory Agreement dated 18 August 2006 (“the Original Agreement”) appointed to act as investment advisor to CapVest Private Equity II, L.P., a Bermuda exempted limited partnership, (“CapVest Private Equity II”) and to CapVest Equity Management II Limited, a Bermuda limited company (“CV Equity”). CapVest Private Equity II was the general partner of, and as such responsible for managing, CapVest Equity Partners II, L.P, a Bermuda registered exempted limited partnership, created as a vehicle for a second CapVest private equity fund (“Fund II”). CV Equity was in turn the general partner of CapVest Private Equity II and was the ultimate decision making authority for Fund II. The Trust held a 25% shareholding in CV Equity.

The First Defendant served as investment advisor in relation to Fund II between 18 August 2006 and 28 September 2012. With effect from 28 September 2012, pursuant to the terms of a Novation Deed dated 28 September 2012, the Second Defendant assumed and discharged all the obligations of the First Defendant under the Original Agreement to CapVest Private Equity II and CV Equity between 28 September 2012 and 16 April 2018. The Third Defendant was the investment advisor to Fund II-B to which reference is made below.

The Trust is or was at all material times a 25.5% shareholder in the First Defendant. The First Defendant was a corporate member of the Second Defendant, CapVest Associates LLP, a limited liability partnership registered in England and Wales.

In addition to being a 25.5% shareholder in the First Defendant, the Trust is or was an indirect investor in Fund II. The Trust invested in Fund II through a co-investment vehicle called CapVest Special Partners II, L.P., (“the Co-Invest LP”) a Bermudan Limited Partnership. The name of the Co-Invest LP reflected the fact that the limited partners who invested in Fund II were external to the Defendants whereas parties connected to the Defendants such as the Trust invested through the Co-Invest LP. The Trust was a limited partner in the Co-Invest LP and in the vehicles which held the carried interest in Fund II and the Co-Invest LP. The Trust in addition held a 25% shareholding in CapVest Group Limited, a Bermudan Company, which was the general partner of the Co-Invest LP.

The structure of the CapVest entities is set out in the chart at Annex 3 to the Response to the Details of Claim. A copy is attached as an appendix to this judgment. The Letter Agreement is shown at the top of the left hand column of the chart.

The Claimants as co-trustees of the Trust have since 2019 expressed in correspondence their concern about the sale in December 2017 of what were then the remaining assets of Fund II, being Fund II's interests in MP Healthcare Holdings, an Irish private healthcare company, (“Mater Private”) and Valeo Foods Group Limited (“Valeo Foods”) (together “the Fund II Remaining Assets”). The purchaser was a US private equity fund known as HarbourVest Partners. The structure of the sale involved a new Bermudan registered limited partnership CapVest Private Equity II B, L.P. being set up as the purchasing vehicle. It was referred to as Fund II-B.

Mater Private and Valeo Foods were sold for the total sale price of EUR 219.3 million (“the First Sale”) of which it is understood by the Trust just over EUR 72 million was paid for Mater Private. The Trust is not and has never been an investor in Fund II-B. The Trust was offered the opportunity to become an investor in Fund II-B. The opportunity was declined by the Claimants on behalf of the Trust based, the Claimants say, on the information provided to them by the Defendants at the time.

In May 2018, five months after the First Sale, Fund II-B resold Mater Private to InfraVia Capital Partners (“InfraVia”), a French-based infrastructure fund, in a deal reported as valuing Mater Private at EUR 500 million (“the Second Sale”).

The Claimants state in paragraph 15 of the Details of Claim that having learned of the Second Sale, they wish to understand better: (a) the process by which the Defendants came to recommend the First Sale to Fund II and to the Claimants; (b) whether the Claimants and the board of directors of the Defendants had been provided with all relevant information at the time, including the same information as received by other shareholders, pertaining to the proposed sale of the Fund II Remaining Assets; (c) how the Defendants identified potential buyers of the Fund II Remaining Assets; and (d) the purpose for, and process by which, Fund II was established.

The Claimants claim that the Trust has a contractual entitlement to the information and documentation requested in Annex 1 to a letter dated 8 August 2022 by the Claimants' current solicitors, Quinn Emanuel Urquhart & Sullivan UK LLP to the Defendants' solicitors, Simpson Thacher & Bartlett LLP, under the terms of the Letter Agreement.

The Letter Agreement is in the form of a letter sent by PineBridge Investments Holdings US LLC (“PineBridge”) to the other parties. It is headed “Re: CapVest Limited”. The parties to the Letter Agreement are set out in the first paragraph. In summary the parties were:-

(i) PineBridge, the successor in title to AIG Global Asset Management Holdings Corp., (“AIG”). AIG was the original sponsor of Fund II. PineBridge owns 50% of the equity in CVL.

(ii) The Trustees of the Trust. The Trust owns 25.5% of the equity in CVL.

(iii) Mr Seamus FitzPatrick (“the Principal”), the surviving co-founder of CVL, and his affiliate, Harden Capital Limited (“Harden”) in its capacity as General Partner of the Harden (Jersey) L.P. Mr Seamus FitzPatrick and Harden own 24.5% of the equity in CVL.

(iv) CVL, CVA, and CVP, the First, Second and Third Defendants respectively.

The purpose of the Letter Agreement is set out in paragraph 2 as follows:-

“This Letter Agreement shall, except as expressly provided herein, govern the relationship between PineBridge, the Principal and the Trusts (and their respective permitted successors and assigns) solely with respect to their joint ownership of CapVest Limited, the management of CapVest Limited and its affiliate, CapVest Associates LLP (together with CapVest Limited, the “CapVest Entities”) and the CapVest Entities' advisory relationship with the Funds.”

Paragraph 3 of the Letter Agreement contains a conflict resolution provision:-

“In connection with the formation of the Funds, the parties have executed various partnership and other agreements, and the constitutional documents of the various entities have been finalized (such agreements and documents (excluding the Articles of Association of CapVest Limited (as defined below) being referred to herein as the “ Documents”). Solely to the extent that a provision of a Document directly addresses the joint ownership of CapVest Limited by the parties hereto and the management of the CapVest Entities by such parties, and such provision is inconsistent and conflicts with the terms of this Letter Agreement, the terms of this Letter Agreement shall prevail as between the Principal, the Trusts and PineBridge. For the avoidance of doubt, in all other respects, including without limitation, in respect of ownership and management of entities other than the CapVest Entities, allocation and payment of carried interest and participation on investment committees of the Funds, the Documents shall remain in full force and effect.”

Section 1 of the Letter Agreement records in its first paragraph that the Principal, the Trusts and PineBridge are the sole shareholders of CVL. It provides that CVL or CVA shall serve as “ the investment advisor to each of the Funds and/or their respective general partners or the general partners or managers of such general partners (the “CapVest Business”).”...