The private equity specialist Candover Investments is to wind itself up, sealing the fate of one of the buyout industry's highest-profile victims of the credit crunch.
Candover's move to sell its portfolio of companies, which includes the oilfield services firm Expro, and return cash to shareholders and investors follows a failed attempt to sell the business last month and ends months of uncertainty over its future.
Many private equity houses have suffered through the downturn, as portfolio companies overburdened with debt have struggled to meet repayments. But analysts said Candover's complicated structure – with a listed parent that co-invests alongside an independent but wholly-owned fund manager, Candover Partners, over which it has no say – drew heavy criticism and lay at the heart of the firm's woes.
When the listed company ran out of money to invest in the fund manager's planned €5bn 2008 fund, the whole structure unravelled. At the start of this year, as its rivals jumped back into new deals having stemmed the worst of their losses, Candover's deal-makers were forced to hand money back to investors.
Yesterday, Candover said it intended to return cash to shareholders as portfolio companies were sold and would wind up the listed vehicle when the process was complete. Before the 2008 financial crisis, Candover was seen a leader in the European buyouts industry, participating in deals such as the merger of Gala and Coral Eurobet to create Britain's leading gaming business. Candover and its investment partners subsequently lost control of the company to a group of lenders.
Candover said there was still significant value in its portfolio, including the oilfield services company Expro, which accounts for almost one third of its valuation. But net asset value fell by 13 per cent in the six months to the end of June to 903p, as valuation multiples declined, driven in part by BP's ruptured Macondo well in the Gulf of Mexico.
"What we have to do over the coming months is look at the range of returns we think can be achieved and the likely timescale in which Candover Partners believe that realisation process is likely to deliver cash back to Candover Investments," said the chief executive, Malcolm Fallen.
Upgrading Candover to "add", Oriel said the potential returns to investors from the sale of portfolio companies were likely to be well above the current share price. The shares closed up 16p at 611p.
Having agreed the sale of the nappy-maker Ontex to TPG and Goldman Sachs last month, Candover is in exclusive talks about selling the on- and offshore trust services firm Equity Trust to rival Doughty Hanson for about £300m.