CVC Asia fund closes on $1.975bn

CVC Asia Pacific’s CVC Capital Partners Asia Pacific II fund has closed on $1.975 billion (€1.5 billion), a record total for a fund targeting Asia Pacific. CVC Asia Pacific is a joint venture between London-based buyout house CVC Capital Partners and global financial services firm Citigroup. 

Andrew Cummins

The fund is the successor to the firm’s Fund I, which closed on $750 million in 2000 and which, according to a statement, has now invested $526 million in 17 companies including Australian retailer Pacific Brands, Yellow Pages (Singapore) and Haitai Confectionery of South Korea.

CVC declined to name individual investors in the new fund but said they comprised a “range of international institutional investors and high net worth individuals”. The fund will target “the most developed economies” in Asia Pacific, which it lists as Australia, Hong Kong, Japan, Singapore, South Korea and Taiwan.

The demand from new and existing international investors is evidence of their belief in the huge investment potential in the region Michael Smith, chairman, CVC

“The demand from new and existing international investors is evidence of their belief in the huge investment potential in the region as we see both rapid development in Asia’s corporate sector and its economies,” said Michael Smith, chairman of CVC.    

According to figures from the Asian Venture Capital Journal, the value of buyouts in Asia Pacific (excluding financial institutions) increased from $2.6 billion in 2000 to $11 billion in 2003. As a percentage of all private equity investment, buyouts rose from 21 percent of total value to 60 percent over the same period.    

Established in 1999, the CVC Asia Pacific team comprises 26 professionals working out of Hong Kong, Seoul, Sydney and Tokyo, supported by an industrial advisory board of six members. The firm’s Asian activities are headed by Hong Kong-based managing director Andrew Cummins.

Last month, CVC sold its stake in Australian hospital operator Affinity Health to Ramsay Health Care for $1.1 billion, having acquired it alongside Ironbridge Capital and Government of Singapore Investment Corporation for $813 million in October 2003. The previous month, it acquired Japanese dental products manufacturer Showa Yakuhin Kako in a $238 million deal.

Asian fundraisings have enjoyed a favourable tailwind of late. Last October, Hong Kong buyout firm Affinity Equity Partners closed its Fund II on $700 million, well ahead of a $500 million target. In January 2005, Japan’s Unison Capital closed its second fund 50 percent ahead of target on $724 million. Meanwhile, former Carlyle Group managing director Michael Kim is currently seeking up to $1.5 billion for his debut Asian fund.

Asia Pacific II is CVC’s first fund since it closed European Equity Partners III on $4 billion in 2001. The firm is understood to be near to closing a new European fund on around €6 billion ($7.8 billion).