CVC, Dunedin close oversubscribed funds

CVC Capital Partners has reached its €10.5 billion hard-cap for its flagship European and North American buyout fund – having turned away some €3.5 billion of additional capital for this vehicle, according to a source familiar with the matter.

CVC could not be reached for comment beyond a statement on its website at press time.

While it is officially a first close, it is unlikely CVC will raise more capital for this vehicle, the source said. 

CVC has formally accepted €10.25 billion in commitments from investors. The remaining €250 million has been allocated and is expected to be legally closed toward the end of the third quarter this year, according to the statement. CVC offered limited partners who committed before the first close a 7.5 basis point discount on the management fee, PEI reported last month. 

Its prior fund, Fund V, closed on about €11 billion in 2008, while its fourth fund raised €6 billion in 2005. Fund V was generating a 9.2 percent internal rate of return and a 1.2x multiple as of 30 September 2012, according to performance information from the California Public Employees’ Retirement System, while Fund IV was producing a 16.8 percent IRR and a 1.7x multiple. Fund III, a €4.65 billion 2001-vintage, was generating a 41.2 percent IRR and a 2.9x multiple. 

The firm had a re-up rate of 90 percent, according to the statement. Investors in the firm’s prior fund included Alaska Permanent Fund, Alberta Investment Management Corporation, Altamar Private Equity, Arizona Public Safety Personnel Retirement System, Arizona State Retirement System, Australian Super, BBVA Wholesale Banking & Asset Management, Berenberg Private Capital, British Columbia Investment Management Corporation, California Public Employees' Retirement System, California State Teachers' Retirement System, Graphite Capital, HarbourVest Partners, New York State Teachers' Retirement System, SL Capital Partners, State of Wisconsin Investment Board, Teachers' Retirement System of Texas and University of Michigan, according to PEI's Research and Analytics division. 

CVC’s co-chairman Steve Koltes said in the statement the firm was pleased LPs had shown them – and the region – such a vote of confidence. “After 32 years of private equity investment in Europe, and despite the many challenges the region faces, we continue to remind our investors that Europe is home to more globalised, highly competitive and well-managed companies than any other part of the world,” he said. 

In other fundraising news, though at the smaller end of the buyout spectrum, UK-based Dunedin has reached the £300 million hard-cap for its Fund III, exceeding its £250 million target. Dunedin’s third fund will invest in UK-based companies with an enterprise value of between £20 million and £75 million. 

The fund, which came to market in the third quarter last year, held a £240 million first close in December 2012.  

The firm’s prior fund raised £200 million in 2006. Dunedin has significantly expanded and diversified its LP base since then, the firm said in a statement. Sixty percent of LPs came from outside the UK, compared to 20 percent in its 2006 vehicle. For the first time, Dunedin attracted interest from the Nordics and the US. It also saw increased investor interest from France, Switzerland and Germany. In addition, the firm saw increased commitments from pension funds, insurance companies, sovereign wealth funds and foundations. 

Dunedin was advised by FirstPoint Equity and had a re-up rate of 56 percent, according to a spokesperson. Of the LPs that didn’t re-up, 60 percent had lack of capital and 30 percent didn’t have capital to invest in private equity, the spokesperson said.