CVC raises €26bn for largest buyout fund in history

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CVC Capital Partners has raised €26bn ($29bn) for the largest private equity fund in history, defying a broader fundraising drought that has left many rivals struggling to raise cash.

In an interview with the Financial Times, Rob Lucas, managing partner at the European buyout firm, said the record haul had surpassed CVC’s original target of €25bn, and its previous fund of €21bn.

“When we announced at the beginning of the year that we were trying to raise the largest pool of capital in these market conditions and in record time, people thought we were a bit ambitious,” Lucas said.

“When deciding on the fund size, it is much more about the level of capital the network is capable of deploying wisely and not the amount of capital we could potentially raise,” he added.

CVC’s figure eclipses the $26bn buyout fund raised by Blackstone in 2019, which was the previous largest. It also comes at a time when many private equity firms are struggling to attract investors, many of whom have found themselves overallocated to the asset class as public market valuations have fallen relative to the value of their private market holdings.

Fundraising across private markets is on track this year to fall almost 30 per cent compared with 2022, according to a report released this week by Bain & Co.

While peers including Advent and TA Associates have been able to raise successfully, gathering $25bn and $16.5bn respectively, others such as Carlyle have had to cut their targets.

CVC is one of the industry’s best-known names, famous for large bets on household name brands such as Spanish football league La Liga and watchmaker Breitling.

Spun off from Citi in 1993, it has grown rapidly from its buyout roots into other asset classes including credit, growth equity and secondaries. The firm employs more than 850 people across 25 offices in Europe, North America and Asia.

CVC has also carved out a niche investing in sports, taking stakes in Six Nations Rugby and the women’s professional tennis organisation WTA, as well as buying an IPL franchise.

The firm currently has about €140bn in assets under management, according to its website. It has a unique profit-sharing model that sees individual dealmakers retain a larger share of profits from successful investments they make.

CVC’s bumper fund raise stands in contrast to some of its better-known peers such as large listed buyout groups Blackstone, Apollo Global and Carlyle, who have all said recently that their buyout funds are likely to fall short of their initial targets.

The fund raise was boosted by a series of sizeable exits in companies including industrial gas specialist Messer and energy platform Neptune. Neptune netted a more than threefold return, and Messer almost sixfold, Lucas said.

“We have continued to exit deals, which is a reflection of the fact that the marks we are holding investments at are cautious and prudent,” Lucas added.

The firm anticipates valuations will come down in the coming months, as sellers reduce their price expectations — a key barrier to deals getting done so far this year.