Alberta mounts bid for Candover

European private equity firm Candover’s share price rose by 19% after it received a takeover bid from one of Canada’s largest pension funds.

Candover Investments, the listed company which owns Candover Partners, has received a takeover offer of up to £227 million (€262 million; $348 million), the firm confirmed on Tuesday. It did not comment on the source of the bid, but a source close to the process confirmed prior reports that the interested party is the Alberta Investment Management Corporation (AIMCo).

AIMCo is one of Canada’s largest institutional investment fund managers, with $69 billion of assets under management for Alberta pensions, endowments and government funds. It has previously indicated it wants to ramp up direct investment activities in-house, rather than invest with fund managers.

The bid is “expected to be at a price no higher than the last reported net asset value per share of 1,038 pence per share as at 31 December 2009”, said Candover in a statement.

Candover shares opened on Wednesday at 907.5 pence, or almost 19 percent higher than Tuesday's close of 739 pence.

Candover Investments, which both owns the management firm Candover Partners and has made sizeable commitments to its funds in the past, has been a potential takeover target since it encountered significant difficulties last year as a result of the financial crisis.

A stalwart of the European private equity market for over 20 years, Candover was brought to near-collapse when the listed company said it would be unable to honour a €1 billion commitment to Candover’s 2008 buyout fund. Other LPs subsequently decided to terminate the fund’s investment period. As a result, Candover has seen its position on this year’s PEI 300 – our ranking of the world’s largest private equity firms – slide from 39 to 68.

Candover was courted in March 2009 – at the heights of its troubles – by a number of potential buyers but decided not to take any of the discussions forward. Since then the company has reported improvements in the value of its portfolio and reduced levels of leverage. It said last month it was concentrating on its existing portfolio, as well as “exploring options to rebuild investment capacity”.

AIMCo has been actively committing to private equity funds since 1997, having built up a portfolio of 58 funds. According to sister data provider, AIMCo intends to invest C$1 billion in the private equity asset class in 2010.

Anna Reitman contributed to this report.