Private equity firm CVC Capital Partners (CVC) has abandoned fundraising for its debut infrastructure fund after failing to attract enough investors to achieve sufficient scale, sources familiar with the fundraising told Infrastructure Investor.
Instead, the firm will seek to retain its three core infrastructure investors as it migrates to a “managed investment arrangement” that will see it provide tailored solutions to limited partners (LPs). CVC hopes to convince the core investors to migrate their commitments to the new platform, but a source said “no money will be returned since none had been drawn down”.
According to the sources, CVC had difficulty convincing LPs – particularly large investors – to commit to a blind pool closed-ended structure with the scale it wanted, since most demanded a degree of control over portfolio construction and asset governance which did not go hand-in-hand with the blind pool fund model.
CVC had been in the market with its first infrastructure fund since 2009, having reached a first close last year on circa €200 million from a small cadre of investors from Europe, Canada and Asia. In addition, it had lined up a further €100 million in soft commitments.
The fund was originally targeting €2 billion, although sources suggested CVC would ultimately have been content with circa €500 million, leveraging co-investment to achieve scale.
CVC has invested in infrastructure from its private equity and buyout funds – buying 15.5 percent of Abertis as well as 25 hospitals in Spain – but the fund’s infrastructure team was unable to close a deal before the fundraising folded.
It was, however, involved in several high-profile bids. Recently, it was the runner up for the acquisition of UK water company Sutton and East Surrey Water, which ended up being sold by fund manager iCON Infrastructure to Japan’s Sumitomo Corporation for an enterprise value of £306 million (€353 million: $455 million).
Prior to that, it was part of a consortium with Goldman Sachs Infrastructure Partners and Universities Superannuation Scheme to acquire the UK water assets of French group Veolia Environnement, which were sold to a team of Infracapital Partners and Morgan Stanley Infrastructure Partners.