Management shake-up continues at Candover

Candover, the struggling private equity firm, put the final touches to a management shake-up yesterday and issued its interim results, both which it hopes will persuade investors that its recent problems, including the freezing of one of its funds, have eased.

As part of the changes, high profile deal maker Colin Buffin, who has been with Candover Partners since 1985, will stand down once negotiations with investors over its frozen 2008 fund are complete. “Colin has been with [Candover], man and boy; I think he thought it was time to hand over to a younger generation, particularly as the climate has changed so much,” said chairman of Candover Investments, Gerry Grimstone. Candover Investments is the publicly listed parent of investment arm, Candover Partners.

Candover has been hit particularly hard by the financial crisis, with the value of some of its investments falling significantly. Like other private equity firms, it faces also the tough challenge of refinancing much of the debt in borrowed cheaply in the bull market during the years leading up to the credit crunch. John Arney, who has previously worked for rival 3i, has been put in charge of the group’s portfolio of investments.

The firm also said that Michael Fallen, the former boss of telecoms group Kcom, is its new chief executive of Candover Investments. The move could signal that the company is paving the way to spin off its private equity arm, an option the group yesterday said it was considering as part of its restructuring programme.

Candover Investments also said that net assets for the first six months of the year were 902p, a 12 per cent drop on the previous half year, which it blamed on currency movements and exceptional costs, including those associated with the loss of more than half the group’s employees.

Mr Grimstone, said the group’s financial position had strengthened in the half year, helped largely by the sale of Wood Mackenzie, the energy research group, for £533m to rival Charterhouse Capital in June.“We have seen stabilisation in the underlying value of our investment portfolio,” he added.

The sale of Wood Mackenzie relieved some pressure the group has been under recently. Its biggest headache, however, remains its frozen 2008 fund, which was originally intended to raise €5bn but which ran into trouble as the financial crisis hit the debt markets, limiting the group’s investment options. Candover says it is talks with its limited partners, with the negotiations expected to last until at least October. Candover has asked investors to withdraw their funds.

The firm said it hoped the talks would lead to the emergence of a smaller fund, but that it would continue to look for investment once the situation is resolved. “We are focusing on the 2008 fund, but no doubt there will a 2011, 2015, 2035 funds going forward. The future is wide open,” said Mr Grimstone.