CVC Capital Partners’ third fund, recently closed at e4.65 billion, will continue to invest in European buyouts, buy-ins, acquisitions, recapitalisations and growth equity transactions and brings CVC’s capital under management to e9.3 billion.
The majority of the fund’s money has been raised from the US (approximately 80 per cent) 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 per cent, 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 (e4.1 billion) the company has obviously not been blighted by the fund raising problems affecting other houses. According to the company this is due to the strong relationship it has with its investors, centred 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 e4 billion. It has also been reported that Doughty Hanson is looking to raise a similar sized fund.
CVC invests in transactions above $800 million (e945 million), to date it’s largest deal was the e1.78 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 (GBP550 million invested by Apax Partners and Hicks, Muse, Tate & Furst in a GBP2.14 billion deal.) The investor also expressed a willingness to partner with other buyout houses to increase its deal capabilities.
CVC predicts a healthy European deal flow. It remains optimistic about the European buyout market, labeling it as robust thanks to opportunities provided by corporate restructuring, privitisations, 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 announced by CVC this month was the e862 million acquisition of Dutch building materials supplier, Cementbouw Handel & Industrie.