Candover shares rise on 37% NAV gains

The listed trust of Candover had its strongest net asset value gains for 19 years as the group's Colin Buffin remains confident despite worsening market conditions.

Listed investment trust Candover Investments’ net assets per share increased by 37.4 percent to £20.65 per share during the 12 months to 31 December 2007, according to its preliminary results.

This is Candover’s highest raise in net asset value per share in 19 years, said Colin Buffin, a managing partner at Candover Partners, the trust’s affiliated European buyout firm.

Candover’s share price rose 4.5 percent to £21.19 ($42.7; €27.7) per share at 1239 GMT.

Colin Buffin: 
dealflow
below €2bn 
less affected

Buffin said: “The exit environment is less positive than it was and the new deal environment is going to be less active.” But he said Candover’s deal range is €500 million ($770.6 million) to €2 billion and this section of the larger mid-market had been less affected by the problems in the debt markets as evidenced by the firm’s successful take-private of Dutch industrial group Stork for €1.5 billion.

“There’s still a buyout market and it will be active and will go back to more normal levels soon. The debt market got ahead of itself last year with covenant lite loans and extremely high multiples in debt financing,” Buffin said. He said it could be a year or two before mega buyouts came back, although it is still very difficult to tell the extent banks have more liabilities to reveal.

He said he did not think buyout firms had overpaid in 2006 to 2007. “If you look at the stock market in 2007 it was basically flat but with volatility. This is not like 2001 and 2002 where there was a very significant long term decline.”

The buyout firm is presently marketing a fund to investors with a €5 billion target having invested 72 percent of its €3.5 billion 2005 fund, the results said. Candover Investments has committed €1 billion to this fund.

The trust had profits before tax of £21 million up from 2006 profits at £20.6 million.

Candover Investments raised £150 million via a US private placement bond issue. It invested £90.5 million in the year, of which £73.5 million was invested alongside Candover in four new investments yacht company Ferretti, Spanish theme park Parques Reunidos, health and safety company Capital Safety Group and consultancy Alma.

The trust wrote down its investment in Gala Coral by around 30 percent to £21 million, less than the near 50 percent writedown by SVG Capital yesterday of Permira’s later investment in the company. Candover acquired the company alongside Cinven in 2003, while Permira bought into the company in 2005 revaluing it at €1.9 billion. The investment was hit last year by the smoking ban indirectly affecting the company’s gambling revenues.

Buffin said: “We expect the effect of the smoking ban will dissipate and people will come back. In countries where this has been introduced there is usually an initial dip in demand and then it picks up again.”

Candover also wrote down its investment in 2000 in French venture capital fund Ciclad 3 from £5.6 million last year to £3.36 million.