Jim McColl, the engineering entrepreneur, is raising money for a £200m private equity fund to provide a new investment platform for his Clyde Blowers business empire.

The fund, which is seeking backing from the big private equity houses, will hold the equity stakes currently held directly by McColl and three executive colleagues in the empire's international pumps and power businesses.

Alex Stewart, one of the team and the chief executive of AIM-listed Clyde Process Solutions, commented: "Clyde Blowers has effectively become a fund manager, managing our investments, getting a return, but at the highest level driving strategy - so we are not that far from a private equity fund-type operation."

McColl added: "We decided we should maybe formalise this into the traditional limited partner structure of a private equity group, going out and raising some funds to allow us to do a number of deals."

Last year Clyde Process Solutions and Interbulk m Investments both used their AIM listings to pull off major reverse takeovers worth a total £122m to quadruple their size, while the former Weir Pumps was acquired for £48m. Bank of Scotland has twice advanced bridging finance to get deals completed, being repaid later by the executives.

McColl added: "We think this is a much better model moving forward.

"We did list two companies on AIM last year, but the market has been dysfunctional. The main reason for being in the market is so you can have access to capital markets, and if they are dysfunctional, that is not practical."

He added that Clyde Pumps had now signed a joint venture deal with China's second-biggest pump maker, and was also poised to seal an Indian joint venture.

"It is almost a year since we bought it and we have added 40 people to the 600 we took on," McColl said.