Cinven set to raise £3.8bn as cash moves into bigger funds

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The Independent Online

Buyout firm Cinven is set to close its latest - and largest - fund of at least €5.5bn (£3.8bn) as investors continue to pile in to mega-buyout funds.

The firm, which owns gaming giant Gala and sold the Fitness First health club chain last year, began raising money in 2005 with a target of €5bn, but sources say that it has already received commitments for €5.5bn. Some even believe it could end up topping out at €6.5bn when it closes later this month, which would make it, albeit briefly, Europe's largest buyout fund.

CVC is currently the biggest with the €6bn fund it raised last year, though Permira is set to close its latest fund in excess of €10bn.

The ease with which Cinven has been able to surpass its goal is a "reflection of the fact that the interest in private equity is targeted at these bigger funds," said Mark O'Hare, the head of Private Equity Intelligence, a research group.

No less than 783 funds are hoping to raise more than $338bn (£183bn) this year, which would be an all time record, though the biggest firms account for an inordinate amount. Kohlberg Kravis Roberts, Texas Pacific and Blackstone, have all attracted more cash than they had originally planned this year. Other big European names such as Doughty Hanson and Duke Street Capital have also begun raising new money recently.

The success of the biggest firms, however, has come at the expense of the industry's mid-sized and smaller groups. "One-third or half of all the funds on the road won't actually close this year," Mr O'Hare said.

Cinven was founded in 1977 and last went fundraising in 2002, when it pulled in €4.4bn. Nearly all of that is now invested.

The firm opened an office in Italy late last year, and market watchers are expecting a deal soon from the firm, perhaps in southern Europe. It has not carried out a buyout since November last year, when it bought French cable company Altice One.

Cinven declined to comment.