CVC strikes Breitling deal as clock ticks for Fund VII close

The private equity firm will pay as much as $804m for the Swiss watchmaker as investors are given an 8 May deadline to commit to its seventh buyout fund.

CVC Capital Partners, which is a week shy of the deadline for interested limited partners to commit to what will be the largest euro-denominated private equity fund ever raised, has agreed to acquire a majority stake in Swiss luxury watchmaker Breitling.

The London-headquartered private equity firm is using its sixth buyout fund for the deal, according to a statement.

“Breitling has a proud heritage, high brand awareness, and enjoys an excellent reputation as one of the finest watchmakers in the world,” Alexander Dibelius, managing partner and head of Germany at CVC said in the statement. “We very much look forward to working with Théodore Schneider as we embark on Breitling’s next chapter of growth.”

CVC will pay as much as SFr 800 million ($804 million; €737 million) for an 80 percent interest in the firm, according to a source familiar with the deal.

Previous majority owner Schneider has re-invested in Breitling and will own 20 percent of the business.

CVC said it plans to expand the business into new geographies and enhance its approach to digital marketing. Breitling is headquartered in Grenchen and employs around 900 people. The firm said it expects to close the deal in June.

CVC’s sixth buyout fund, CVC European Equity VI, is a 2013-vintage €10.5 billion vehicle that was backed by limited partners including Swedish pension fund AP Fonden 2, California Public Employees' Retirement System and Canada Pension Plan Investment Board, according to PEI data. Fund VI is not yet fully invested, according to a person with knowledge of the fund.

The firm is raising CVC European Equity VII which is expected to hold a first and final close on its €15.5 billion hard-cap in the second quarter of this year, according to a source familiar with the fundraising. Limited partners have until 8 May to submit commitment documents and CVC will itself commit capital representing at least 3 percent of the fund, the source said.

The firm’s seventh buyout fund has a 6 percent hurdle rate, slightly below the 8 percent market standard, to reflect a lower return environment in private equity, as previously reported. CVC is also offering reduced management fees to certain limited partners – LPs who commit less than €100 million during the commitment period will pay a 1.5 percent fee, while those with commitments of between €100 million and €250 million will be charged 1.425 percent.

CVC declined to comment on the price it will pay for the stake and its fundraising for Fund VII.

Photo credit: George Shahda