Cinven €7bn fund to close within weeks

The pan-European buyout firm is understood to be nearing a final close on its sixth flagship vehicle.

Pan European firm Cinven has raised more than €7 billion for its latest flagship vehicle, which is expected to reach a final close within weeks, Private Equity International has learned.

This would make the Sixth Cinven Fund bigger than Fund V, a 2012-vintage vehicle that closed on €5.3 billion.

The firm declined to comment.

Fund V is understood to have made its final investment partnering with the Canada Pension Plan Investment Board (CPPIB), one of the fund’s LPs, to acquire 100 percent of online travel services company Hotelbeds Group for an enterprise value of €1.2 billion. The acquisition of the Palma de Mallorca-based online wholesale accommodation provider from Tui Group, announced today, is split equally between Cinven and CPPIB.

“We have a long standing relationship with CPPIB and they were a natural party for us to turn to with this investment,” Cinven senior principal Chris Good told PEI. “We talk a lot with potential co-investors we might work with. I’ve had a number of conversations with CPPIB over a lengthy period of time and this [investment] seemed like it would be something they would be interested in. They joined us five, six months ago, so, well ahead of the process.”

Hotelbeds is largest business to business database of hotel beds in the world offering rooms to travel and tour operators from an inventory of 75,000 hotels in more than 180 countries, Cinven said. The group was established in 2001 and employs 6,150 people globally.

It follows the firm’s investment in travel transaction and technology company Amadeus in 2005 in a €4.4 billion deal alongside co-investors, according to Cinven’s website. During Cinven’s ownership, the company invested more than €1 billion in research and development, driving 48 percent revenue growth and 84 percent growth in EBITDA. The firm sold its remaining stake in the company in 2011, generating a 7x return.

“It is very similar to Amadeus but much more focused on the hotel side, that was our attraction to the business and the market,” Good said. “We felt very comfortable with the business and investing in it.”

From an investment thesis perspective, Cinven had been looking for similar global businesses in a “two-sided” market, in this case hotel accommodation and tour and travel operators, which are linked by a technology platform.

Good added that the hotel accommodation market is very fragmented and there is a “real opportunity for consolidation”. The buyers also plan to “invest heavily” in technology at a similar level to its investment in business management software company Visma and Amadeus.

“The bedbank segment continues to grow fast and with the backing of Cinven and CPPIB we will be well placed to invest more strongly than ever in technology, innovation and distribution,” Hotelbeds Group chief executive officer Joan Vilà said in the statement, which noted management also participated in the transaction.

“The management team here is outstanding and we are very excited to be backing them,” Good noted.

Good declined to comment on the fundraising.