Published June 27, 2013
NEW YORK – Buyout firm CVC Capital Partners Ltd has raised more than the 10.5 billion euros ($13.7 billion) it can accept for its latest flagship fund in just six months and will have to turn down money, a person familiar with the matter said on Thursday.
The Financial Times earlier reported that CVC had attracted pledges from investors totaling more than 14 billion euros. CVC started fundraising in January with a 9 billion euro target and has a so-called "hard cap" of 10.5 billion euros it cannot exceed without consent from existing fund investors.
CVC declined to comment.
Private equity fundraising took a hit during the 2008 financial crisis as investors fretted over the future of debt-laden deals and opted for what they perceived to be safer assets. By raising the second largest buyout fund since the financial crisis, CVC has shown the market has turned.
Blackstone Group LP last year raised a $16 billion private equity fund, the largest since the financial crisis, but took four years to secure the money from investors.
Other firms have exceeded their fundraising targets of late. Advent International Corp raised 1.5 billion euros more than its 7 billion euro target for its latest fund and BC Partners Ltd raised 500 million euros more than its 6 billion euro target.
To be sure, CVC's fund, CVC European Equity Partners VI, had offered sweeteners to investors. For example, it offered not to charge fees on 5 percent of commitments received before the so-called first close, when investors are asked to commit to the fund, according to market research firm Preqin.
Neither do all private equity fundraising efforts prove successful. Apax Partners LLP, which like CVC had a 9 billion euro fundraising target for its latest buyout fund, said last week it had managed to raise just 5.8 billion euros.
This is because a clearer picture of fund managers that are capable of delivering returns even through a downturn is now emerging in the minds of investors. Money is piling into such managers at the expense of others.
The private equity fundraising market remains crowded, with 276 buyout funds collectively targeting $226 billion in capital commitments, Preqin said this week.
CVC European Equity Partners V, a 10.8 billion euro buyout fund the firm raised in 2008, was valued at 1.3 times its investors' money as of the end of March, according to Standard Life European Private Equity Trust Plc , an investor.
Its predecessor fund, the 6 billion euro CVC European Equity Partners IV raised in 2005, was valued at 2.1 times its investors' money. Private equity funds typically have a 10-year lifespan and are therefore judged on a long-term basis.
Founded in 1981 and active in Europe, U.S. and Asia, London-based CVC has invested in companies across most sectors of the economy, ranging from sports rights management Formula One to warehouse retail store chain BJ's Wholesale Club Inc.
(Reporting by Greg Roumeliotis in New York; Editing by Bernard Orr)