Candover has defied the current fund-raising environment and succeeded in raising euro1.1 billion for its 2001 Fund. The fund’s final closing is expected before the end of the year and is aiming for a total of EURO2.5 billion.
The 2001 fund, launched in January, will continue the firm’s investment policy – targeting buyouts of EURO100 million to EURO1.5 billion in the U.K. and Europe.
Over the next four years around half of the fund will be invested in continental European transactions, such as the EURO920 million MBO of Picard Surgeles completed by Candover in February this year. The sectors favored by the group are media, manufacturing and engineering, financial services, chemicals, support services, consumer and IT. The fund’s first deal should be announced in the next few months.
Much of the capital is coming from Candover’s previous investors, and institutions on both sides of the Atlantic. They include the California Public Employees’ Retirement System, Massachusetts Institute of Technology, the Metropolitan Museum of Art and funds managed by Standard Life and UBS.
Marek Gumienny, joint managing director of Candover, said, “The popularity and awareness of private equity amongst investors keen to maximize returns from their assets is rising, particularly in Europe.”
According to Colin Buffin, also joint managing director, the success of this closing can be attributed to the firm’s track record. Candover boasts a gross realized IRR of 45% over the 21 years since the firm was established.
This is the company’s seventh fund, bringing its capital under management to around EURO4 billion. The Candover 1997 Fund raised EURO1.4 billion, around 90% of which has been invested. Previous funds in 1989 and 1994 each raised around EURO490 million.
Fund raising conditions are so tough in the U.S. that established houses have been forced to scale back the target sizes of their funds. However, with a new fund to Candover’s name, Buffin remains optimistic about the buyout climate in Europe. He said, “The deal pipeline for the new fund looks very healthy, the environment for making investments over the next 12 months is good, and we are looking forward to putting the fund to work.”