CVC, Glendower confirm tie-up amid secondaries M&A fever

The secondaries specialist, which spun out of Deutsche Asset Management, is at least the fifth secondaries firm to be subject to an M&A process this year.

CVC Capital Partners has confirmed it is to merge with Glendower Capital, the latest in a slew of M&A processes involving secondaries firms.

Europe’s largest private equity firm by assets under management will combine with the London-headquartered secondaries specialist to create a roughly €113 billion investment firm, according to a statement.

Glendower’s senior management will continue to lead the team, which will operate independently under its established brand name, the statement noted.

“CVC has a fantastic network with boots on the ground in 25 offices globally with deep geographical and sector expertise – attributes particularly interesting to us when we want to enhance our due diligence and underwriting capabilities,” Glendower managing partner and chief executive Carlo Pirzio-Biroli told Private Equity International. “We see that as an edge.”

Private Equity International and Secondaries Investor reported on a possible transaction in July.  News of the potential tie-up was first reported by Bloomberg.

Glendower spun out of Deutsche Asset Management in 2017 and manages or advises on $8 billion across six funds. The firm had amassed $2.5 billion out of a $3.5 billion target for Glendower Capital Secondary Opportunities Fund V as of 30 July, Secondaries Investor reported.

Among the deals it has backed this year are a €700 million single-asset process on DomusVi Group, one of Europe’s largest care home providers, and a $200 million single-asset on Emerald Textiles, a healthcare linen management provider in the western US.

Glendower was attracted to CVC for several reasons, including a common culture, according to Pirzio-Biroli.

“We share a similar investment philosophy – bottom-up underwriting of quality assets, with a focus on quality and price. Both houses share a common European heritage with our largest offices in London,” which are very close to each other, he said.

On how the two firms will operate, Pirzio-Biroli said there will be one degree of separation between the firms with an “appropriate set of information barriers, to maintain that one degree of separation which is requested in order to successfully transact in this market”.

Glendower has no immediate plans to add new fund strategies to its existing flagship private equity strategy, he added.

In late 2019, Pirzio-Biroli predicted continued consolidation in the secondaries market was to be a key future theme.

At least five secondaries firms have been acquired so far this year. In July, PGIM, the asset management arm of insurance company Prudential Financial, said it had agreed to acquire Montana Capital Partners, while StepStone Group also said it had agreed to acquired Baltimore-based venture capital specialist Greenspring Associates. The same month, Tikehau Capital said it had acquired a majority stake in Singapore-headquartered Foundation Private Equity to expand its footprint into Asian secondaries.

Ares Management completed its acquisition of Landmark Partners in June, as affiliate title Private Equity International reported.

“It is very difficult to build [a secondaries firm] in this market,” Gerald Cooper, head of secondaries North America at Campbell Lutyens, told Secondaries Investor in July. “Human resources are more scarce than capital.”

Experienced market players bring technical expertise as well as the relationships, both of which are critical, he added.

Some still prefer to build rather than buy. Apollo Global Management launched its credit secondaries business in April with a senior hire from Goldman Sachs. Brookfield Asset Management chief executive Bruce Flatt said in May that the firm had largely decided to grow its secondaries capability organically.