Cinven and CVC join forces for NewDay

The two buyout firms have clubbed together before: on the acquisition of airline leasing business Avolon in 2010.

Buyout houses Cinven and CVC Capital Partners have clubbed together to acquire UK credit card business NewDay from alternatives firm Värde Partners, the two firms said in a statement on Tuesday. While financial details were not disclosed, it is understood that the deal valued the company at around £1 billion ($1.2 billion; €1.1 billion).

NewDay, which has five million customers, operates in two areas of the consumer credit segment: the “near-prime” market, in which it provides credit cards to consumers with low credit ratings, and the store card market, providing co-branded credit cards through retailers such as Debenhams and House of Fraser.

As deal sizes increase in the buyout market, it is likely that club deals, in which competing general partners work together, will increase in incidence.

“The market is incredibly crowded with a lot of capital chasing deals” one London-based investment banker told PEI. “Firms will want to partner with each other more.”

“We’re certainly seeing larger deals in the market currently, some of which is being driven by the disposal of large non-core assets from corporates,” said one European general partner, who asked not to be identified.

CVC and Cinven have co-owned businesses in the past. The pair is understood to have generated 2.3 times their invested capital on aircraft leasing business Avolon, which they bought in 2010 and fully exited in January this year. CVC and Cinven both declined to comment on the prospect of further club deal activity in the market.

Cinven is currently investing its €7 billion sixth fund, which closed this year, while CVC is investing its €10.9 billion 2013 Europe Fund VI. CVC is reportedly planning a return to fundraising mode in early 2017 for its seventh fund with a target size of €12.5 billion.