In the early part of 2009, some of the remaining investment team of UK buyout firm Candover Partners assembled in a conference room at the offices of City law firm Travers Smith Braithwaite. The situation looked bleak. Their employer, a near 30-year veteran of the UK private equity scene, had been facing an uncertain future ever since listed parent Candover Investments reneged on its cornerstone commitment to the firm’s new fund. A number of staff had already jumped, or been pushed; everyone else had one eye on possible exit routes.
Too close to the sun
Candover Partners’ dramatic decline and fall received a great deal of attention. But some argue that there’s been too much focus on the mistakes of the listed parent Candover Investments (CIP), as opposed to those of the fund manager (hereafter CPL).
Of course, Arney wasn’t in charge when CPL was suffering from this “strategy drift”, as he calls it. He joined in 2002 from JPMorgan’s buyout arm, and quickly built up an impressive track record: his biggest hit was Vetco, the oilfield business that netted Candover a return in excess of 4x. Promoted to managing director in 2006, he was elevated to the top job in the middle of 2009, after former CPL co-heads Marek Gumienny and Colin Buffin (plus their respective protégés) had stepped aside in light of the group’s troubles. Arney claims this succession was “well planned and mapped out” – although he also admits that it was “accelerated” by events.
Time to get creative
Which brings us to the other big question: what happens next? Again, Arney is unequivocal. “We set out to build an enduring business, so by definition we need to raise new capital. We continue to find very interesting proprietary opportunities; some of them we’ve been working on for years already. So we will in due course find capital to back those buyouts.”
Arle, like Candover, is a landmark in Hampshire (albeit a river, not a valley). Depending on your point of view, that’s either a discreet and respectful nod to the past – or an acknowledgement that despite its best efforts, Arle will find it hard to leave that past behind entirely.
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When the Arle team inherited Capital Safety Group in July 2009 (its principals were not involved in the original deal), the safety equipment maker was valued at only a little over cost. Less than three years later, in January 2012, it was sold to Kohlberg Kravis Roberts for $1.1 billion, generating €362.3m in proceeds – a 2.7x return.