SVG deepens relationship with Cinven

The listed investor has committed €120m to the European buyout firm’s latest flagship vehicle.

London-listed private equity firm SVG Capital has committed €120 million to Cinven’s latest flagship vehicle. The Sixth Cinven Fund is near to closing on around €7 billion, as reported by Private Equity International.

“When we did our due diligence on Fund Six, we ascertained there are some very interesting subsector themes they have identified, which we are confident they can convert into deal flow,” SVG head of private equity fund investment and co-investment Robin Winning told PEI.

SVG is also close to investing $125 million with a new US-based manager, which will take its GP relationships to seven, it said in its first quarter results ending 30 April. Its target is eight to 10 managers and the firm anticipates making one further commitment to a US-based manager by the end of the year.

SVG’s new commitment to Cinven is an increase on its earlier, €100 million commitment to The Fifth Cinven Fund, a 2012- vintage vehicle that raised €5.3 billion. The firm has also co-invested alongside that fund in business software company Visma.

When picking funds, the firm looks for “good sector focus and good operational capability” and a demonstrable ability to translate sector knowledge into transactions, Winning said.

“That was one of the things we think Cinven does incredibly well. There is a very strong correlation between the sub-sectors that their sector teams are focused on and how that is converted into deals. We looked at the early work that we did in Cinven Fund V due diligence, [and] we very much see that came through into composition of the portfolio.”

Overall, the firm has committed more than £730 million ($1.1 billion; €957 million) since the launch of its new strategy in 2012 to diversify away from solely investing in Permira funds. It sits on the advisory board of all its funds and expects its managers to offer co-investment, Winning said.

It latest co-investment was a $15 million investment into second lien debt and equity in lawn care company TruGreen alongside Clayton, Dubilier & Rice. The transaction brings its total co-investments to five. SVG is an investor in CD&R Fund IX with a $140 million commitment.

“Being early is a key part of the strategy,” said Winning, highlighting that the firm was one of a few large new investors in AEA Investors Fund VI. The firm made a $100 million commitment to that fund, which Winning described as “difficult to access”.

AEA Fund VI, a global buyout fund, launched in 2015 targeting $2.5 billion and closed on $3.2 billion, according to PEI Research & Analytics.