At the start of last year, private equity practitioners were described as being the masters of the universe. The label looked a little silly a few months later when the bottom fell out of the leveraged finance market, making it much more difficult for financial sponsors to borrow to engineer buyouts.
But there are different types of private equity firm. While the market studied the misfortune suffered by the barbarians – like Kohlberg Kravis Roberts, which bought Alliance Boots, and BC Partners, which thought Foxtons estate agency was a tasty buy – smaller groups continued to make money by concentrating on the less sexy end of the market.
That is where the returns continue to be made. Today, the rather clunkily named China Private Equity Investment Holdings (CPE) will list on the Alternative Investment Market (Aim), hoping to raise between £3m and £10m in the process. The group, run by a number of Asia market old-timers, plans to invest in Chinese and Taiwanese companies.
The firm's chief executive, Duncan Chui Tak Keung, above, reckons that "we distinguish our investment approach from other private equity funds by being an active manager to create portfolio synergy and to add value to our investees" .
Other private equity investors may take umbrage with Mr Chui's claims about CPE's unique selling point, but private equity investment in China, which has hitherto largely escaped the meltdown in the debt markets, is probably the place to be. Whether or not the banks will be willing to lend to CPE to fund buyouts if the credit crunch takes in toll in China remains to be seen.
Circle Oil taps Gaddafi's newfound capitalist zeal
Libya has come in from the diplomatic cold in recent years after renouncing terrorism, and Colonel Gaddafi, Leader and Guide of the Revolution, is slowly embracing capitalism.
The change of approach is being felt on Aim. Libya Oil Holdings, an oil and gas exploration company owned by the Libya Africa Investment Portfolio, a government-backed sovereign wealth fund, has bought a 29.66 per cent stake in Aim-listed Circle Oil for £19m. The deal is part of an equity placement by Circle worth a total of £33m. As well as the investment by Libya Oil Holdings, the placing attracted £10m from Kaupthing Bank.
The funds will be used to cover the cost of Circle's exploration programme in Morocco, Tunisia and Egypt. The group plans to drill up to 15 wells between now and the end of 2009, and will also conduct a large 3D seismic study on a block in Oman.
Sub-prime lender MCB thrives in the Baltic states
It is not just in the United States where you can find people unflatteringly described as sub-prime. There is a financial under-class in the Baltics too, and it is served by, among others, MCB Finance.
The Aim-listed group, which sells its loans mostly online, has broken even for the first time, after originally listing as Mobile Credit Baltic last January. (The name was changed because investors assumed that the firm was a technology company.)
Typically, the group lends between €100 (£81) and €800, repayable six months later, at a higher rate of interest than at a high-street bank. The group is experimenting in lending as much as €2,000, paid back over two years.
There seems to be plenty of people looking to borrow in countries that MCB operates in. The lender doled out €10m in its first financial quarter, in Estonia, Latvia, Lithuania and Finland.
Kalahari and Extract to merge
in March, Small Talk reported that Aim-listed Kalahari Minerals, the Australian uranium andcopper miner, had become majority stakeholder inExtract Resources. Next month Kalahari will complete a reverse takeover.The group will become AIM's biggest uranium miner, with operations largely in Namibia, and a market capitalisation of about £110m.Reuse content