Side Letter: CVC, EQT eye mega-funds, MENA entices, Investcorp’s US push

The real reasons MENA private equity is heating up, European giants eye mega-funds, inside Investcorp's debut US PE push. Here’s today's brief, for our valued subscribers only.

Just happened

Show MENA the money

Source: Getty

Our MENA Special is out this week, beginning with a look at competition and pricing. The region has hit the skids in recent years after an economic downturn, the murder of Jamal Khashoggi and Abraaj Group’s collapse. Now MENA is re-emerging as manager consolidation, low levels of dry powder, limited competition and cheap assets create an attractive buying opportunity. Who stands to benefit? “Well-governed GPs with a track record,” Cairo-based Actis partner Sherif Elkholy tells us.


CVC, EQT and BC Partners are eyeing mega-fund raises in the next 12 months, per the FT (paywall). We understand EQT has yet to decide on details but could target around €14 billion, while CVC would seek around €18 billion as early as next year. An interesting point to note: since its 2013-vintage Fund VI, CVC has removed the clause on its flagship funds’ LPAs preventing it from raising its successor before the current fund is more than 70 percent deployed. Lawyers, placement agents: how common is this? Let us know.

Coming to America (with a fund)

Investcorp’s decision to raise a debut US PE fund is driven by the difficulty of accessing capital on a deal-by-deal basis from public pensions there. That’s because these LPs are constrained by resources when it comes to analysing deal-by-deal investments and align themselves to fund structures of managers they trust. The new fund is likely to get a boost from Investcorp’s May acquisition of placement firm Mercury. Tell us you didn’t see that coming.


Silverfleet’s gold. Tech assets continue to prove their worth. London’s Silverfleet Capital stands to make 4.6x from the agreed sale of imaging software business Phase One to Danish private equity firm Axcel. Silverfleet acquired a majority stake in the business in 2014 and completed two add-on acquisitions during its ownership, including its main supplier in Japan.

What’s got growth growing. Growth capital will become as large as buyouts in a decade, Hermes GPE partner Elias Korosis tells us. The driving force behind it? “Technology, capital and talent coming together,” he says. Hermes GPE has moved away from buyouts and made direct growth equity investments a key part of its programme over the last five years. The fund of funds manager is seeking as much as $500 million for its fourth co-investment vehicle.

Dig deeper

New Jersey. The state’s Division of Investment has increased its PE target allocation to 12 percent from 10.25 percent. Here’s a breakdown of the $80 billion pension plan’s investment portfolio. For more information on NJDOI, as well as more than 6,700 other institutions, check out the PEI database.

He said it

“What obfuscation ideas can you come up with to delay this by a few weeks?”

Abraaj’s Arif Naqvi writes to fellow executives in response to the looming deadline of a $5 million payment owed to a sovereign wealth fund, US prosecutors alleged on Thursday.

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Today’s letter was prepared by Adam LeCarmela MendozaAlex Lynn and Preeti Singh.

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