CVC unveils plan to raise €1.25bn in long-delayed IPO

CVC Capital Partners, one of Europe’s largest private equity firms, is aiming to raise more than €1.25 billion in an initial public offering on the Amsterdam stock exchange, ending a years-long wait to go public.

The firm, which manages €186 billion in assets across a range of investment strategies, is seeking a valuation of between €13 billion and €15 billion, according to a person with knowledge of the plans. Some existing shareholders will sell stock and one backer, Blue Owl, will increase its stake.

The announcement, which confirms a Financial Times report last week, comes despite renewed turmoil in the Middle East. CVC has twice postponed plans to float when geopolitics unsettled markets.

The conflict in the Middle East had again prompted CVC to delay announcing its intention to float on Monday, but by a matter of hours, as opposed to months, CVC managing partner Rob Lucas said in an interview.

“It’s a serious situation, we have been giving it a lot of consideration and thinking about it very carefully,” Lucas said. “We held the intention to float until after the markets opened so we could see they were stable.”

That the firm is pressing ahead indicates the increasing momentum across European markets for new listings. There have been a series of large IPOs in recent weeks, including by dermatology business Galderma and CVC-backed retailer Douglas.

CVC will also become the latest private equity group to go public, following US peers including Blackstone, KKR & Co and Apollo Global Management as well as European rivals EQT and Bridgepoint. Shares in some publicly traded peers including Blackstone and EQT have recently performed strongly, with both trading up more than 40 per cent over the past 12 months.

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Founded in the early 1990s by a group of dealmakers including Rolly Van Rappard, Steve Koltes and Donald Mackenzie, CVC has established itself as one of Europe’s biggest buyout groups.

Boosted by successful bets on companies ranging from Formula One to watchmaker Breitling, the group last year raised €26 billion for the largest private equity fund ever raised.

Alongside growing its core private equity unit, the group has expanded into other asset classes including credit and infrastructure. In 2021, CVC sold a stake in itself to US investment firm Blue Owl in a deal valuing the business at €15 billion.

The firm generated more than €1 billion in revenue last year, according to a statement confirming the company’s intention to float.

There has been internal debate about whether going public, which brings constant pressure to keep growing assets under management, will have an impact on the firm’s profit-focused culture.

CVC previously planned to list in 2022 but was forced to postpone after Russia launched its full-scale invasion of Ukraine. The firm revisited plans to go public last year but conflict in the Middle East contributed to it again pushing back a proposed listing.

The buyout industry has also faced challenges as higher interest rates have made dealmaking more difficult and some investments have come under pressure as borrowing costs increased.

While CVC has been preparing to list, some of its more experienced executives have retired from the business they founded. Koltes retired in 2022 and Mackenzie announced in February this year that he was stepping back. Van Rappard will chair CVC when it lists.

Going public will enable existing shareholders including the Hong Kong Monetary Authority, Kuwait Investment Authority, and Singapore’s GIC to reduce their stakes. Over time, older executives such as Mackenzie and Koltes who have stepped back can also more easily sell stock as a result.

It will also provide CVC with capital to pursue additional acquisitions in areas such as real estate and potentially help finance the acquisition of Dutch infrastructure investment firm DIF Capital Partners, which was announced last year.

Executives believe that the listing will also help increase the firm’s visibility and help it raise more money from a new group of backers including wealthy individuals over time. – Copyright The Financial Times Limited 2024


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