CVC recently closed out its third fund, which will continue to invest in European buyouts, buy-ins, acquisitions, recapitalizations and growth equity transactions, bringing the firm’s capital under management to EURO9.3 billion ($8.1 billion).
The majority of the fund’s money has been raised from the U.S. (approximately 80%), although the company reports an increased interest from European and Middle Eastern investors. Most of the investors from the last fund have returned and the number of institutions has increased by 25%, with pension funds providing a large share of the capital.
Although CVC views fund raising as a continual process, it started raising in earnest at the beginning of last year.
Given that the original plan was to raise $3.5 billion (EURO4.1 billion) the company has hardly been blighted by the fund-raising problems affecting other houses. According to the firm, this is due to the strong relationship it has with its investors – a relationship that is centered on a policy of transparency and good reporting.
CVC’s last European fund, CVC European Equity Partners II, also broke fund-raising records when it closed on $3.1 billion three years ago. The current fund’s closest competition currently comes from Apax and BC Partners, which have both raised funds of around euro4 billion. It has also been reported that Doughty Hanson is looking to raise a similar sized fund.
CVC invests in transactions above $800 million (EURO945 million). To date, it’s largest deal was the euro1.78 billion MBO of Kappa Holdings. However, with the increased firepower provided by this fund, it is likely to be looking at larger Yell-sized transactions.
Partners at CVC predict a healthy European deal flow. They remain optimistic about the European buyout market, labeling it as robust, thanks to opportunities provided by corporate restructuring, privitizations, buyouts of privately owned businesses, the European spread of public-to-privates and the growth of leveraged build-ups. The company also refers to the growing credibility of private equity among investment bankers and the increased availability of managers capable of leading MBOs.
Also this month, CVC announced the EURO862 million acquisition of Dutch materials supplier, Cementbouw Handel & Industrie.