Investment Trust Insider on CIP Merchant Capital – James Carthew: small cap newcomer needs to pick up the pace
At the tail end of 2017, a new fund launched onto the Alternative Investment Market: CIP Merchant Capital (CIP). It started life with £55 million of cash and the plan was to deploy that by the end of March 2019. Today, I reckon it still has over £18 million left to spend, close to a third of the flotation proceeds. Investors subscribed £1 for their shares. At 18 April the net asset value (NAV) was 89.3p and the share price is 66.5p, that equates to a 25.5% discount.
The key people behind CIP are Marco Fumagalli and Carlo Sgarbi. Marco was a global partner at 3i and later ran a private equity portfolio for a Swiss family office. Carlo’s background is in investment banking at IMI Group. They established Continental Investment Partners SA in 2013. The idea behind CIP is that it takes a private equity approach to investing predominantly in listed equities. The same concept employed by Strategic Equity Capital (SEC), Odyssean (OIT) and Gresham House Strategic (GHS), which I wrote about last November. Those other funds focus on UK small caps, however. CIP has a more wide-ranging remit.
Like the other funds, CIP is intended to have a concentrated portfolio of between five and 10 companies. These will be companies that the managers think possess strong fundamental attractions including a good management team. They will be cash generative or close to being cash generative and the managers will have identified an opportunity to cash in the investment within one to five years from the date of investment.
The five companies that comprise CIP’s current portfolio are:… read more here