Candover Investments, the troubled listed private equity investor, could receive a much-needed cash injection of around £30 million (€35 million; $49 million) in proceeds if a reported sale of portfolio company Wood Mackenzie comes to fruition.
The listed company holds an effective equity stake of 6.3 percent in Wood Mackenzie, a provider of services to businesses in the energy sector bought buy Candover in 2005.
Charterhouse Capital, a London-based buyout firm, is reportedly in exclusive talks to buy Wood Mackenzie for £550 million having beat off competition from rival firms Bain Capital, Hellman & Friedman and Warburg Pincus. According to a report in this morning’s Financial Times, around £250 million of the purchase price would be financed by Wood Mackenzie’s existing lenders, led by Lloyds Banking Group.
Wood Mackenzie: a ray of sunshine for Candover?
A £550 million bid would generate cash for Candover Investments approximately equivalent to the carrying value of Wood Mackenzie as of the most recent annual report. As well as generating around £19 million in direct proceeds, an exit would, according to a source with knowledge of the situation, crystallise some carry on Candover’s 2001 fund, generating an estimated further £10 million.
The sale of Wood Mackenzie would provide a much needed boost to Candover Investments at a critical time for the firm. Earlier this year it confirmed that it had pulled out of its €1 billion commitment to Candover’s 2008 European buyout fund as a lack of distributions from existing investments choked its ability to honour new capital calls.
The firm is currently conducting a review of its options, which include a sale of all or part of the business – most likely to a major secondaries player – or going into “run-off” and returning capital to shareholders.
Candover would be able to use the proceeds to pay down its debt, which as of the end of December 2008 stood at £65 million. This would give the firm some breathing space, but it would by no means be “out of the woods”, said the source.