UK-listed private equity firm Candover Investments has announced it is to stop investing in the 2008 fund in light of the difficult market conditions as it reports a 50% write-down in the value of its portfolio.
The firm blamed a “tough year for private equity” for its plight. Chairman Gerry Grimstone laid the blame at the fall in value of Candover’s portfolio as a result in the collapse of the public markets, and the lack of exits brought about by the global economic crisis.
“As a result of this market turmoil, we are not currently in a position to make any further commitment to invest alongside the 2008 Fund beyond our existing investment in Expro. We are therefore in discussions with the limited partners in the 2008 Fund regarding a restructuring of the Fund, which may include a temporary suspension of the investment period until such time as these matters have been resolved,” he said in a statement.
The firm is now focussing its attention on shoring up its financial position so it is in a position to realise the value from its 2001 and 2005 funds, and is in talks with lenders to this end.
It is also preparing to cut staff, with Asian and Eastern European operations either forced onto a self-financing footing or closed down. The Candover Group has six offices in London, Hong Kong, Madrid, Milan, Mumbai and Paris.
Colin Buffin, managing director of Candover Partners, said: “The impact of the global economic downturn is evident in our year-end valuations, which are derived principally by applying public market comparable multiples. The fall in valuation multiples compounded by the impact of leverage in the capital structures has resulted in a significant decline in the net asset value. However when stock market valuations recover, we expect to see equity value returning. We remain convinced that there is significant longer-term value in our investee companies.”
All strategic options for the group – one of the oldest private equity firms in Europe – are being considered, with Merrill Lynch and Lexicon hired as advisers.
Candover Investments has committed €1bn in the 2008 Fund, which had an initial target of €5bn on launch, but had only raised €2.8bn to date. It hopes to close this year. UK oil services company Expro is the only investment from the fund.