CVC exceeds €4bn target for latest long-term fund – exclusive

The private equity giant expects a final close for CVC Capital Partners Strategic Opportunities II by year-end.

CVC Capital Partners has passed the target of its second long-life fund and is expecting to hold a final close this year, Private Equity International has learned.

The private equity and credit firm has raised more than €4 billion for CVC Capital Partners Strategic Opportunities II, according to a source familiar with the matter. The firm started discussions with investors about the fund early last year, as PEI reported.

A filing with the Securities and Exchange Commission shows the fund formally launched in April.

The California State Teachers’ Retirement System has committed $232 million to the fund, according to the US pension’s Private Equity – Semi-Annual Performance Report for the period ending 31 March.

CVC declined to comment on fundraising.

CVC debuted its Strategic Opportunities offering in 2014 ahead of its peers, who have in the last two years raised mega-funds that target deals with an expected longer hold period of 15 years or more.

KKR has its $8.5 billion Core Investment Strategy while Blackstone has about $5 billion for its Core Equity Partners fund. The Carlyle Group raised $3.6 billion for its first long-dated fund in 2016 and Apollo Global Management held a $2.2 billion first close against a $3 billion target in August last year for its Hybrid Value fund – a long-term vehicle which combines credit and equity, focusing on capital solutions, structured equity and non-control stressed and distressed investments.

CVC’s latest vehicle will continue the strategy of its €3.9 billion predecessor which targets high quality and stable businesses with typical enterprise values of between €1 billion and €5 billion, with a longer holding period of around six to 15 years.

CVC Capital Partners Strategic Opportunities I received about $1 billion from the California Public Employees’ Retirement System, according to PEI data. Since the strategy was created, €2.8 billion of equity capital has been committed to six investments, according to CVC’s website.

Longer-term funds have been a growing trend in the industry as GPs find more ways to increase returns and improve deal flow in the current market. According to Dechert’s 2019 Private Equity Outlook, 27 percent of GP respondents said they had already established a long-hold fund and nearly one third said they were considering it.

CVC, which has 24 offices globally, is also in market with its fifth Asia-dedicated fund targeting $4 billion, according to a January filing with the SEC.