CVC VI is nearly 90% invested after $1.4bn deal

The successor fund set a European record when it closed on €16 billion in June.

CVC European Equity Partners VI is almost 90 percent invested following its $1.4 billion acquisition of global beauty products company PDC Brands from Boston-based Yellow Wood Partners, PEI has learned.

The deal comes amid a flurry of transactions from the €10.9 million fund. Fund VI, which was raised in 2014 and received commitments from California Public Employees' Retirement System and Canada Pension Plan Investment Board, also agreed to acquire IT education specialist QA Group, flight ticket platform Etravelli and automobile leather provider Pasubio in June.

The 2014-vintage, €10.5 billion Fund VI was delivering a net internal rate of return of 1.8 percent and a total value to paid in 1.02x as at 30 September 2016, according to documents prepared for a New Jersey State Investment Council investment meeting in March.

CVC set a record for European private equity fundraising after closing its seventh flagship buyout fund on €16 billion in June. The fund attracted investments from Massachusetts Pension Reserves Investment Management Board, Teachers’ Retirement System of Louisiana and New Jersey Division of Investment, and included a €500 million GP commitment.

The firm was attracted to Stamford-based PDC by its potential for growth, as well as the international nature of the business, a source close to the matter told PEI.

Yellow Wood partnered with the PDC Brands management team in 2012, after its $225 million debut fund closed earlier that year. The company has since quadrupled its revenues and increased EBITDA by more than five times, according to a statement from the firm.

“[PDC’s] growth was driven by a combination of exceptional organic growth and five add-on acquisitions, all of which were sourced on an exclusive basis, that greatly broadened the company's portfolio of brands,” Dana Schmaltz, founding partner of Yellow Wood Partners, said.

Yellow Wood targets equity investments between $50 and $150 million for each portfolio company. The firm takes a “concentrated” approach to investing, with only three to five companies in its portfolio at a time.