CVC Capital Partners raised €26bn (USD29bn) to create the largest private equity funds in history. This was despite a general fundraising drought, which has seen many competitors struggling to raise money.
Rob Lucas, the managing partner of the European buyout company, stated in an interview that the record haul exceeded CVC’s initial target of €25bn and its previous fund, €21bn.
Lucas: “People thought we were ambitious when we announced, at the start of the year, that we would try to raise the biggest pool of capital under these market conditions in record time,” he said.
He added that when deciding the size of the fund, the focus should be on how much capital the network can deploy wisely rather than the amount we could raise.
CVC’s amount surpasses Blackstone’s $26bn fund, which was previously the largest. The announcement comes as many private-equity firms struggle to attract investors. Many of them have become overly invested in the asset class due to falling public market values relative to their private market holdings.
According to a Bain & Co. report published this week, fundraising across private markets will fall by almost 30% this year compared to 2022.
Carlyle, for example, has had to reduce its targets. While Advent and TA Associates, peers, have raised $25bn each and $16.5bn respectively, other firms, such as Carlyle, have not been able meet their goals.
CVC is a well-known name in the industry, known for its large bets placed on household names such as Spanish football league La Liga or watchmaker Breitling.
It has expanded rapidly since its 1993 separation from Citi to include other asset classes such as credit, growth equity, and secondary. More than 850 employees are spread across 25 offices located in Europe, North America, and Asia.
CVC also has a niche in investing in sports. It owns stakes in the Six Nations Rugby team and in WTA (women’s professional tennis organization), as well as an IPL franchise.
According to its website, the firm manages assets worth about €140bn. The firm has a unique model of profit sharing that allows individual dealmakers to retain a greater share of the profits they generate.
CVC’s record-breaking fund raising is in stark contrast to its more well-known competitors, such as the large listed buyout groups Blackstone and Apollo Global, which have recently said that their buyout funds will likely fall short of initial targets.
Fund raising was boosted through a number of large exits, including those from industrial gas specialist Messer as well as energy platform Neptune. Lucas stated that Neptune had a return of more than three times and Messer, almost six times.
Lucas said, “We’ve continued to exit transactions. This is a reflection that the marks at which we hold investments are cautious and conservative.”
The firm expects that valuations will fall in the months to come as sellers lower their price expectations. This has been a major barrier for deals so far this year.