Candover suspends investment activity

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The Independent Online

The Beleaguered European private equity group Candover has formally suspended investment activity for the next six months, as it looks to salvage the business smashed by the financial crisis.

Candover's chairman Gerry Grimstone said yesterday, at the company's interim management results, that the company had reached an agreement with investors in its 2008 Fund as it attempts to shore up the ailing business.

The group said it will "suspend its investment activity for up to six months while we explore all the strategic options available and continue to stabilise our financial position".

No new investments will be made until October, the company said, and investors would only pay fees on portfolio company Expro International. Candover bought oil services group Expro for £1.6bn last April.

London-listed Candover last month said it was reviewing its options and was writing off some of its core investments. "Given the impact on Candover's financial position of the unprecedented global economic developments which occurred in the latter part of 2008, the immediate focus was to reinforce the financial position of the company," the company said.

Shortly after that, the buyout group revealed it had been approached with a series of proposals from unnamed suitors, including offers for a full takeover. Candover, which is advised by Merrill Lynch and Lexicon Partners, is understood to have held discussions with rivals including Blackstone.

Yesterday the group said it may enter into preliminary discussions "with selected parties in due course" although the talks with Blackstone are understood to have collapsed.

Another option is to wind Candover down altogether, it emerged in March. This would see the company retain a small staff to oversee the selling-off of its portfolio companies.

The private equity industry has suffered badly in the wake of the global downturn. Last week news emerged that fundraising in the first quarter of the year had hit a six-year low.

Research group Private Equity Intelligence found that $45.9bn (£31.2 bn) was raised by 71 funds between the beginning of January and the end of March, the lowest amount since 2003. This reflects falling investor appetite at a time when the model of debt-funded acquisitions has all but collapsed as banks refuse to lend.