F1 owner CVC Capital Partners in talks over £9bn fund

Buyout group is ready to raise cash, despite hard times for the private-equity sector
Click to follow
The Independent Online

The private-equity owner of Formula One and Legoland Parks has started talks with potential investors for an ¤11bn (£8.9bn) buyout fund, one of the biggest since the financial crisis started.

CVC Capital Partners, which in 1990 was spun-out of a Citicorp vehicle that propelled the careers of City bigwigs John Botts and Jon Moulton, is said to have started "soft marketing" for the long-touted fund. This is when buyout barons talk to investors about the potential shape, size and returns of a fund ahead of formally asking for the cash.

A structured process is expected to start in the New Year, in what private-equity insiders believe is a crucial test of an industry that has been badly hit by both the financial crisis and a regulatory clampdown by the European Union. CVC's last fund in 2008 raised about ¤10.8bn, short of its ¤12.1bn target, but the firm's co-founders hope to raise marginally more this time.

However, big-name rivals have been struggling to raise their own funds. New Look and Ancestry.com owner Permira launched a ¤6.5bn fund last year, but is so fed up with waiting that it has slapped down a February deadline for investors to commit to "first close".

This is the point when private equity can start spending the money, which in Permira's case would be when it has raised the first ¤2bn. Private Equity News said last week that the deadline came after agreeing a seven-month extension for its previous fund in June, as it had not yet spent all of its money.

However, a private-equity fundraising specialist said: "There's a very good chance that CVC will make that number. CVC and Permira are chalk and cheese: CVC probably provides private-equity investors in funds of that size with the best returns in Europe."

CVC, which also owns Brit Insurance and gym chain Virgin Active, will see co-founder and chairman Michael Smith stand down in January just as the latest fundraising kicks off. That leaves three remaining founders – Rolly van Rappard, Steve Koltes and Donald Mackenzie – to run the company.

The four men founded CVC as a unit of Citicorp out of London in 1981. Mr Botts and Mr Moulton were managing directors that same decade, but went on to found boutique investment firm Botts & Co and private-equity rival Alchemy respectively.

CVC is also looking east, having sold a 10 per cent stake in itself to sovereign-wealth funds from Kuwait, Hong Kong and Singapore earlier this year.