CVC Capital Partners Ltd. is pressing investors to commit to its 9 billion-euro ($12 billion) buyout fund within the next eight weeks to preempt European Union rules that could stop the private-equity firm seeking backers from the region, three people with knowledge of the fund said.
CVC is seeking to hold a first close of the fund at about 7 billion euros before July 22, said the people, who asked not to be identified because the talks are private. That will allow CVC to start spending the money and qualify for some exemptions from the EU’s Alternative Investment Fund Managers Directive, the people said.
The rule gives the Paris-based European Securities and Markets Authority and national regulators the right to limit access by private equity firms based outside the EU to investors inside the bloc. CVC bases much of the administration of its funds in the Channel Islands, which though part of the U.K. are outside the EU. By meeting the deadline, CVC will be able to continue to sell the fund to EU investors largely as before. Future funds would still come under the directive.
“The U.K. guidance currently indicates that if you are already marketing your fund prior to July 21 you can continue to do so after that date,” said Samuel Kay, head of investment funds at Travers Smith, a London-based law firm. “In other jurisdictions, different views are being taken -- in particular non-EU private equity fund managers may need” to hold a first close before July “to qualify for grandfathering,” he said.
A spokesman for CVC in London declined to comment on the fundraising. CVC’s most-recent buyout fund, the 10.8 billion-euro CVC European Equity Partners V LP, has generated a net internal rate of return of 9.2 percent, data compiled by Bloomberg show.