CVC raises $2bn for Asia

The fund is preparing its first close and expects to reach a $3.5bn final close early next year.

CVC Asia Pacific, the Asia unit of UK-based private equity firm CVC Capital Partners, has raised $2 billion from investors for its fourth Asia vehicle, people with direct knowledge of the matter confirmed to Private Equity International.

The $2 billion takes the firm to its first close, which will happen officially at the beginning of 2014.

CVC also expects to reach its final close in the early months of the year. It is targeting $3.3 billion from external investors, which is also the hard cap, and will provide a GP commitment of an additional $200 million.

The fund will focus on investing in Greater China, Southeast Asia and North Asia, which includes Japan, but no longer invests in Australia.

The firm left Australia after its failed investment in Nine Entertainment fell into the hands of senior lenders Apollo Global Management and Oaktree Capital Management in a $3.4 billion debt-for-equity swap that caused the firm to lose about $1.8 billion.

However, CVC has made a splash in Southeast Asia – a coveted market by the private equity industry.

The firm sold 40 percent of Indonesia-based Matahari Department Stores in March, gaining a 7x-8x return on the investment, a source told PEI earlier.  The deal was worth $1.3 billion, having priced the 1.17 billion shares divested at Indonesian Rp 10,850 (€0.86; $1.12) per share.

But with increased interest in the region, high valuations in some of Southeast Asia’s economies are creating challenges for private equity, Sigit Prasetya, managing partner of CVC Asia Pacific, said in May, speaking at the CFA Institute Annual Conference in Singapore. Prasetya leads the firm’s efforts in Southeast Asia and is based in Singapore.

In 2010, the year CVC invested in Matahari, companies in Indonesia were trading at six – seven times EBITDA and today they are trading at about 15 times EBITDA, he explained.

CVC Capital Partners is a London-headquartered private equity firm with about $50 billion in assets under management, according to PEI’s Research & Analytics division.

The firm is also currently in the market with its sixth European fund. The fund is targeting up to €9 billion with no hard-cap and is likely to be oversubscribed, sources told PEI earlier. The fund was expected to make a first close during the summer this year.