CVC Capital Partners Ltd., the private-equity owner of Formula One motor racing, amassed 10.5 billion euros ($13.8 billion) for a leveraged buyout fund, the largest raised by a European firm since the financial crisis.
The firm raised the maximum it sought after starting to gather pledges in January, London-based CVC said in a statement today. About 90 percent of the money came from investors in the firm’s previous funds, CVC added.
The fund is the biggest raised by a European private-equity firm since the financial crisis of 2008 left investors with less money to plough into the funds, according to research firm Preqin Ltd. London-based competitor Apax Partners LLP spent 15 months raising 5.8 billion euros for its latest buyout fund while Permira Advisers LLP spent 18 months raising 2.2 billion euros, less than half of the 5 billion-euros it’s still seeking.
“If you look at CVC’s track record it is far more successful than other managers of a similar size,” Jos Van Gisbergen, a senior portfolio manager with responsibility for private-equity investments at insurer Achmea BV, said in a telephone interview. “CVC have shown they can add value to their portfolio companies using ‘outside the box’ thinking with deals such as Formula One and BPost,” a Belgian postal company.
Formula One was among the firm’s most-profitable holdings. The firm has already reaped more than $4 billion on its original investment of $1 billion, and expects to make as much as $7 billion from the holding ultimately, founding partner Donald Mackenzie said in an October interview. The firm raised 812 million euros when it took Bpost public in May in an initial public offering that valued it at about 2.9 billion euros.
Mackenzie, Rolly Van Rappard and Steve Koltes took over as CVC’s co-chairmen after Michael Smith, who negotiated CVC’s spinoff from Citicorp in 1993, stepped down in January.
“The investment community has shown so much interest,” Koltes said in the statement. “It is a vote of confidence in Europe and in CVC’s deeply-rooted and highly qualified professionals across the region.”
The fund surpasses the 8.5 billion euros Advent International Corp., a Boston-based buyout firm that invests in Europe and the U.S., raised in November. It’s still smaller than the 11.2 billion-euro pool Apax closed in 2008 at the start of the financial crisis, according to London-based Preqin.
CVC’s 2008 buyout fund, the 10.8 billion-euro CVC European Equity Partners V LP, generated a net internal rate of return of 10.4 percent, data compiled by Bloomberg show. That puts its performance among the top 25 percent of all private-equity funds raised that year, according to an investor in the fund.
The firm accepted 10.25 billion euros of pledges from investors as of July 19, the firm said in a statement today. CVC has allocated a further 250 million euros to investors, which it expects to legally close by the year-end.
The speed of the fundraising was partly influenced by CVC’s desire to pre-empt European Union rules that could stop the private-equity firm seeking backers from the region. By holding a close before July 22, 2013, the firm expects to qualify for some exemptions from the EU’s Alternative Investment Fund Managers Directive, including unfettered access to investors.
Private-equity firms typically pool money from pension plans and endowments with a mandate to buy companies within five to six years, then sell them and return the money and a profit after 10 years. The firms usually charge a management fee of as much as 2 percent and keep 20 percent of the profits from investments.