Cinven’s Third exceeds target

The buyout firm’s new fund has received over E3.5bn in commitments from 60 investors, a third of which have invested in the firm for the first time.

Cinven, the European LBO house, has announced a closing of the Third Cinven Fund, which to date has received in excess of E3.5bn in commitments from investors. Exceeding its original target, which was set in February when fundraising began, the fund is expected to attract additional commitments early in 2002.

The fund follows on from Cinven’s second, a fully invested E2.4bn vehicle that was raised in 1998. Over 60 institutions, 50 per cent of which are of European origin, have invested in the new fund. Of these, around one third decided to back Cinven for the first time, according to Andrew Joy, a director at the firm and responsible for fundraising.

Joy commented that closing such a large fund was a major effort for anyone, particularly at a time when public markets were in decline and institutional allocations to private equity were under pressure. “We are delighted with the response of investors in what many consider to be a difficult fundraising climate”, he said, adding that in spite of the current climate, the fundraising had demonstrated that the buyside were generally still in favour of private equity as an asset class.

The new fund, one of the largest raised in Europe, gives Cinven considerable firepower to pursue investment opportunities in the new year. According to Joy, the fact that the level of activity in the European buyout market has declined significantly in the second half of 2001 has little bearing on the fund’s prospects. “There has been very substantial growth in the market over the past five years. In terms of how many E500m plus buyouts are completed each year, the difference between five years ago and now is like night and day. As far as we’re concerned, it is still day”, he said.

The first investment for the new fund was the recent E925m purchase of Klöckner Plentaplast, the German manufacturer of packaging materials, reflecting the firm’s appetite for large industrial buyouts in Western Europe.

The private placement division of Merrill Lynch is acting as placement agent for the Third Fund. The Merrill team is led by Ben Sullivan.