Rejuventated Candover pulls plug on sale

The listed firm’s financial footing has been bolstered by the £553m sale of Wood Mackenzie, one of several factors reducing its need to sell the business to reported potential buyers like Coller Capital.

Candover Investments, the London-listed parent of UK buyout shop Candover Partners, has said it will not move forward with any talks to sell all or part of its business.

Since receiving varied “expressions of interest” in March, Candover and its advisors “have been engaged in detailed discussions with a number of parties to see whether an offer for the entire issued share capital of the company might be forthcoming which would deliver superior value to shareholders”.

Candover said none of the proposals had “sufficient certainty and value to shareholders to justify further consideration”, and has subsequently ended all sale talks.

Market sources said potential Candover buyers had included secondaries giant Coller Capital, which in February paid £50 million for a 24 percent stake in struggling SVG Capital, the listed Permira investor.

The pressure for a sale has subsided, Candover indicated, due in part to realisations and measures taken to shore up its balance sheet, though chairman Gerry Grimstone noted the firm is continuing to review the possibility of an alternative structure for its listed entity.

Candover’s recent £553 million sale of consulting business Wood Mackenzie to Charterhouse Capital Partners generated initial proceeds of £36.2 million for Candover, with roughly £20 million in cash proceeds and another £17 million in carry tied to the Candover 2001 Fund. The listed Candover entity held a stake of about 6.3 percent in Wood Mackenzie, a provider of services to businesses in the energy sector that Candover Partners bought in 2005.

This realisation augments measures Candover has taken to strengthen its financial footing, including revoking its €1 billion commitment to the 2008 Fund, which as a result only raised £2 billion of its £5 billion target and temporarily suspended investment pending revised agreements with limited partners. Candover also said it sold certain non-core assets for roughly £6 million and has downsized its staff, reducing annual salary costs by £7 million.

All of these factors “should mean that Candover will be in full compliance with the covenant obligations attached to its 2014 loan notes as at 30 June 2009”, the firm said. It added that Candover should have sufficient capital to meet follow-on commitments to the 2005 Fund.

Inability to meet capital calls has been a source of concern  – and driver of share price declines – for many listed funds with aggressive over-commitment strategies.

Candover Partners is now being led by John Arney, sources have confirmed. He recently replaced long-time senior managing directors Colin Buffin and Marek Gumienny.

At press time, Candover Investments was trading up 5 percent from its opening price at 325 pence per share, giving it a £71 million market capitalisation.