Private equity buyers sought for debt held by Kaupthing

Investment bank Close Brothers is corralling mid-market GPs to acquire leveraged debt owned by Icelandic bank Kaupthing. The debt relates to such buyouts as Coral Eurobet and Merlin Entertainment Group.

European investment bank Close Brothers is attempting to form a consortium of mid-market private equity firms to acquire leveraged buyout debt from collapsed Icelandic bank Kaupthing.

A source close to the situation, however, said that the operation was still in its early stages with no deals likely to be struck before the end of this year.  

The size of Kaupthing’s leveraged loan book is not known, but since October 2005 the bank has participated in the financing of 14 leveraged buyouts across Europe, backing among others the buyout of gaming company Coral Eurobet by London-based private equity firms Candover, Permira and Cinven. Other notable deals supported by the bank included The Blackstone Group’s buyout of Merlin Entertainment Group, a leisure attractions company, and Charterhouse Development Capital’s acquisition of PHS Group, a workplace services provider.

Last week Kaupthing’s administrator, Ernst & Young, appointed Cairn Financial Products, a London-based credit consultancy, to advise on part of the leveraged loan portfolio, according to a statement from Cairn.

All parties mentioned declined to comment.

In related news, earlier this month British retail magnate Philip Green snapped up a 28.5 percent stake in UK menswear chain Moss Bros from troubled Icelandic bank Baugur. The acquisition followed talks between Green and Baugur to acquire an estimated £1.5 billion of Baugur's debt, a deal which a number of private equity firms were also thought to be interested in.