CVC Raises 4.6 Billion Euros for Second Long-Term Fund

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(Bloomberg) -- CVC Capital Partners has raised 4.6 billion euros ($5.2 billion) for its second long-term investment fund, exceeding its target by 600 million euros.

  • The firm closed CVC Capital Partners Strategic Opportunities II, exceeding its target by 600 million euros, the firm said in a statement on Thursday.

Context

  • The firm raised just under 4 billion euros in 2014 for its predecessor fund.
  • The long-term strategy generally yields slightly lower returns than traditional buyout funds in return for a lower risk profile. It also gives investors the opportunity to take stakes in industries such as education and infrastructure that might not fit into an approach with a faster turnaround.
  • London-based CVC acquired the pool of capital from about 25 institutional investors after fundraising for 12 months.

The Details

  • The new fund will continue focusing on “low-risk” investments, mainly in Europe and North America, spending 200 million euros to 750 million euros of equity per deal.
  • CVC has already made its first investment from the fund, buying a stake in GEMS Education, the biggest private-education provider for students from kindergarten to high school.
  • “Education is a sector we feel comfortable in and believe the sector will remain sustainable for at least the next 10 to 20 years,” said CVC managing partner Lorne Somerville. “We avoid sectors that are prone to significant disruption like media and high-street retail.”
  • “We look for businesses with strong recurring revenues and where there is a value creation plan with management that we can support,” Somerville said.

Background

  • Separately, CVC is considering a target of more than 18 billion euros for its next flagship fund, a person with knowledge of the matter said in June.
  • Founded in 1981, CVC has $75 billion of assets under management and invests in asset classes including private equity and credit.

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