Cinven, a European private equity firm, has reached it €5 billion target for its “Fifth European Buyout Fund”. It is the successor to a €6.5 billion fund raised in 2006.
The firm, which held a €3 billion first close on Fund V in March 2012, had a “substantial” re-up rate and many existing LPs re-upped at larger amounts, Cinven’s managing partner Hugh Langmuir told Private Equity International. “There has been a trend of manager consolidation and we have benefited from that trend,” he said.
The firm increased its investor base in North America. Approximately 50 percent of LPs came from the US, compared to 42 percent in the previous fund. “Some of the Canadian and US state pension funds are very well represented,” Langmuir said.
Cinven attracted commitments from a diverse group of LPs including sovereign wealth funds, family offices and insurance groups, but pension funds were the largest group, he said. In addition, LP commitments from Asia and the Middle East increased to 18 percent, compared to 10 percent in the previous fund. Asia is “increasingly becoming an important part of the fundraising market”, he said.
According to Private Equity International’s Research and Analytics division, some of the LPs in the fund include: British Columbia Investment Management Corporation, Employees' Retirement System of the State of Hawaii, New York State Common Retirement Fund, New York State Teachers' Retirement System (NYSTRS), Washington State Investment Board, State Teachers Retirement System of Ohio, Oregon Investment Council (OIC), Oregon Public Employees' Retirement System and Pennsylvania Public School Employees' Retirement System. SVG recently also announced it committed €100 million to Cinven’s Fund V.
The current fundraising climate “has been tough and it remains so”, Langmuir admitted. “I think we benefitted from three things: a strong track-record, a clear strategy and an experienced team,” he said.
Apart from giving an early bird discount for investors that committed before the first close, Cinven didn’t tailor any terms and conditions to get LPs on board, Langmuir said. “We have been marketing a European fund and investors have backed our investment strategy across Europe. We had no specific request for caps or quotas [on investing in certain EU countries],” he added.
“We have an exclusive European focus and I think investors like that clarity and they have backed our judgement and over the five year investment period in fund V, there will be attractive opportunities to invest in Europe, despite a pretty difficult macro-economic environment. We have already made investments out of this new fund – including a buy and build in the pharma space, and we have demonstrated with these investments that we can identify and acquire high quality growing businesses in Europe,” he said.
Fund V is 14 percent deployed following the investments in Pronet, Mercury Pharma and Amdipharm. Since 1988, Cinven has reported a 41 percent gross IRR on 82 realised investments.