Firm: CVC Credit Partners
Fund: CVC Credit Partners Global Special Situations Fund LP
Target: $750 million (anticipated)
The credit business, which has $11.8 billion in assets under management, in both the United States and Europe, intends to target some $750 million for the fund, according to an investor who reviewed a draft of the PPM. The pool is expected to be named CVC Credit Partners Global Special Situations Fund LP. A formal launch could come as soon as this month, the investor said. The fund is expected to have a six-year term.
CVC Credit Partners is not alone in identifying a buying opportunity in the loans held by European banks, which are under pressure from regulators to clean up their balance sheets. Many investors intend to buy distressed assets from banks, such as non-performing loans. CVC Credit Partners, by contrast, plans to target stressed-but-performing loans, a market it expects to be less crowded, the investor said.
The European Central Bank plans to publish an assessment in October of the health of European banks, according to sister news service Reuters. The assessment will include results of tests of the ability of banks to handle a variety of stresses.
A second source familiar with the special situations fund’s strategy said that the European Central Bank’s new regulatory framework “is the major catalyst for significant disposition programs of impaired assets out of the European banking system. Having a standardized way of bucketing risk across the board helps to make this such a big opportunity.”
This source added that CVC Credit Partners is “well positioned” to take advantage of the opportunity because of its network of 12 offices across Europe. “You need to know the assets, you need to know the local landscape, to take advantage of the opportunity,” he said.
It is not clear if buying loans from European banks will be the sole strategy of the CVC Credit Partners fund, although the word “global” in the name suggests a broader mandate. According to its website, CVC Credit Partners invests “across the capital structure, with dedicated vehicles for performing credit, opportunistic strategies and direct lending.”
Key executives on the special situations fund include Stephen Hickey, the New York-based chief investment officer of CVC Credit Partners. Prior to joining the firm he had held a number of senior roles at Goldman Sachs, including global head of leveraged finance and co-head of global loans. Mark DeNatale, the New York-based partner and global head of trading, previously worked at Goldman Sachs as a managing director and head of loan trading.
CVC Credit Partners was formed in early 2012 by the combination of CVC Cordatus Group and Apidos Capital Management. The business at the time had $7.7 billion managed through 23 vehicles in the United States and Europe.
Since 1996, CVC Capital Partners has raised more than $60 billion through two families of private equity funds, the CVC European funds and the CVC Asia-Pacific funds. On the strength of its track record, the firm raised 10.9 billion euros ($15.0 billion) in just six months last year for its latest European fund. The fund was oversubscribed.