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Candover holds €2.3bn first close

Along with co-investor Cinven, Candover has also announced the sale of a £200m stake in UK bingo operator Gala to Permira in a deal which values the company at £1.9bn.

European buyout firm Candover has announced a first close of its latest buyout fund with commitments of €2.3 billion ($2.8 billion).

More than 85 percent of commitments to the first closing of the Candover 2005 Fund have come from existing investors. Under a co-investment agreement, Candover Investments plc has committed €400 million to the new vehicle.

Investors in the 2001 fund included AP Fonden 3 (The Third Swedish National Pension Fund), Invesco Private Capital, Canada Pension Plan Investment Board, CalPERS, Massachusetts Institute of Technology, Martin Currie & Co, Bristol-Myers Squibb Co and the Metropolitan Museum of Art among others.

We have been admirers of the Gala business for many years and approached Candover and Cinven because we have long believed that the prospects for its business are strong.

Martin Clarke, partner, Permira

The new fund is the successor to the €2.7 billion Candover 2001 Fund, which is currently 82 percent invested and has realised more than €900 million or 40 percent of amounts drawn down according to a statement from the firm.

In separate news Candover and Cinven, joint owners of UK bingo and gaming company Gala Group, have announced a partial realisation of their equity holdings in the company, via a refinancing that values the company at £1.89 billion.

The two private equity firms have also sold equal equity stakes in Gala to fellow UK buyout house Permira. Permira will invest £200 million to become a joint and equal owner of Gala alongside Candover and Cinven, who originally acquired the company for £1.24 billion in March 2003.

Permira lost out in that 2003 auction and Permira partner Martin Clarke said in a statement: “We have been admirers of the Gala business for many years and approached Candover and Cinven because we have long believed that the prospects for its business are strong. Gala has proved itself time and time again through impressive earnings growth and its ability to generate cash.”

Candover said that the sale to Permira, the refinancing and a £1 billion refinancing earlier this year had crystallised a cash return of 1.3 times the firm’s original investment.

The refinancing of this transaction was arranged and underwritten by Lehman Brothers, Royal Bank of Scotland and UK-listed mezzanine provider Intermediate Capital Group (ICG).

Gala Group was advised by Close Brothers. Cinven and Candover were advised by Merrill Lynch, Deutsche Bank and UBS. Lehmans and Global Leisure Partners provided advice to Permira.