Private equity major Candover is in talks with its limited partners to cut the size of its latest $3.8 billion fund amid dearth of buyouts. Candover Investments, the firms listed arm, may look to cut a significant amount of investment in the fund, the company said in a . Candover Investments Plc had invested more than $1.25 billion in the fund. This move is similar to other major fund houses like UK-based Permira and US-based TPG, who have also cut their fund sizes. Candover was initially planning to raise $6.3 billion for this fund.
Candover has also added in its statement that “restructuring” would also involve a revised investment strategy. This would be due to a smaller fund and the significant changes in the global economy in the last six months. Candover started its Asia operations last year and hired Jamie Paton from 3i Group to establish a team based in Hong Kong. It has also hired Harsha Raghavan from Goldman Sachs to head its India operations.
The reduction in fund size implies a fall in fees, which might lead to layoffs and cutdowns at the private equity firm. Several funds like Blackstone, Carlyle and 3i have already made cuts in their staff.
Private equity funds have been cutting slack to their investors in order to smooth the relations. In Decmeber last year TPG allowed investors to cut 10% of its latest $20 billion buyout fund. Permira cuts its fund to Euro 9.6 billion from Euro 11 billion. Recently Bain Capital has decided to relinquish the quarterly management fees for all its active private equity funds and invest the money in portfolio companies.
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