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Thursday 8 December 2016

Activist hedge fund buys Circle Oil stake

Published 14/06/2015 | 02:30

Circle produces oil and gas in Africa
Circle produces oil and gas in Africa

Audley Capital, the activist hedge fund investor run by feared corporate raider Julian Treger has emerged as owning a 6pc stake in Irish exploration firm Circle Oil. The Limerick headquartered resources company has seen its share price fall 60pc on the AIM index since last September.

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Circle produces gas and oil in Morocco and Egypt and is exploring for oil and gas in Oman and Tunisia. The company has been hit by falling oil prices and has refinanced its debt with Kuwaiti lenders.

The Audley Capital stake may see some major changes at Circle. Audley founder Julian Treger has battled with the boards of the retailer Liberty, jeweller Signet and glassmaker Pilkington at his previous fund Active Value. The UK-based fund was one first activist investment houses. It targeted under-performing companies, bought stakes, and then actively lobbied for management restructuring. Treger's partner, Brian Myerson, once commented: "You have to have had kills. You need to take people down. Barking is just not good enough," Treger said.

The Mayfair based financier's Audley Capital follows a similar strategy.

"What I have realised is that you don't need to own 29.9pc of a company to make sensible changes. If you play it right you can agitate for change with 1, 2, 3, 4pc stakes - if what you are proposing makes sense," he said in an interview.

"As a smaller shareholder you can make very big changes. Institutional shareholders might be loath to get involved but they're not stupid. They don't ignore good ideas."

Treger made a fortune for his backers when Audley Capital invested $25m in Western Coal in 2007. He joined the board and lobbied for change. The company was turned around and in 2010 was sold to Walter Energy for $3.3bn, netting Audley Capital and its investors around $400m.

Circle Oil has a new CEO in Mitch Flegg and a new finance chief in Susan Prior. The company was initially involved in Libya when it was ruled by dictator Colonel Gadaffi.

The country's sovereign wealth fund Libya Oil holdings bought a 17.7pc stake in the firm. However this stake has been frozen by EU authorities since 2011.

Sunday Indo Business

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