With markets so volatile, how is Caspian Securities, the world's only investment bank dedicated solely to emerging markets, coping with the situation? Fine, according to its founder and chief, Christopher Heath. But others are less sure, especially in the wake of Peregrine's fall.
Heath's Caspian sought to allay such fears in December when it informed clients it had bolstered its capital base with an $80 million rights issue. It was originally formed in June 1995 with $50 million of shareholder capital and Heath says this has taken the private company's capital base to $240 million. "We are not expecting to have further capital increases. We always planned to have around $250 million," says Heath.
Some observers think it smacks of a defensive manoeuvre to replenish losses. "No," says Heath. "From the very outset we intended to raise our capital base, and now we feel we are well placed, especially now that we have 340% more regulatory capital than we require."
But with blood in the water in Asia, and increasing volatility in most emerging markets, many are convinced that smaller firms such as Caspian will suffer tough times. For Heath, the timing of the Asian fallout could not be worse.