Operational review

Although 2007 was another record year for European private equity with transactions worth €175 billion, the majority of deal activity took place in the first half of the year, before the fallout from the US subprime mortgage crisis hit the buyout market.

Candover invested in four transactions during the year. Three were completed before July. Since the credit slowdown we have been able to structure and execute two sizeable transactions: the Alma buyout in December and the delisting of Stork in February 2008.

Investments

The Candover 2005 Fund made four new investments during the year, with Candover investing £73.5 million and the Candover 2005 Fund £445.0 million. See Table 1.

Table 1

Date of
investment  		 Company Activity Candover
£m		 2005 Fund
£m
January Ferretti Luxury motor yacht manufacturer 32.1 194.3
March Parques Reunidos Operator of attraction parks 10.5 63.5
June Capital Safety Group Fall protection equipment 11.5 68.3
December Alma Consulting Group Cost reduction and tax recovery services 19.4 118.9
         
      73.5 445.0

 

Since the year-end, the Candover 2005 Fund has completed one further transaction: the delisting of Stork, a Dutch engineering conglomerate, from the Amsterdam Stock Exchange. Candover invested £54.7 million, alongside the Candover 2005 Fund which invested £336.0 million.

Candover made two investments in existing portfolio companies:

  • £7.0 million in Wood Mackenzie, alongside £64.6 million provided by the Candover 2001 Fund, to acquire a further 24% stake from the directors and staff of the business
  • £4.2 million in Ontex, alongside £32.0 million provided by the Candover 2001 Fund as part of the refinancing which was completed during the year.

Realisations

2007 was a record year for realisations with Candover and its managed funds receiving proceeds totalling £1.2 billion during the year; Candover’s share was £162.4 million. Our realisations were in the main well advanced before the market correction, the exception to this being Get, the first exit from the Candover 2005 Fund, which took place at the end of the year.

The principal realisations are set out in Table 2.

Table 2

Date of
realisation		 Company Proceeds   Type
    Candover
£m		 2001/2005 Fund
£m		  
Feb/July Vetco 19.3 178.4 Trade sale
April Wellstream 17.6 156.0 IPO
May Innovia Films 7.4 57.9 Refinancing
July Thule 31.0 261.9 Private equity sale
September Dakota, Minnesota & Eastern Railroad 27.4 – Trade sale
October Bureau van Dijk 16.7 142.7 Private equity sale
December Get 29.4 197.2 Private equity sale
  Other 13.6 3.8  
    162.4 997.9  

 

Candover 2008 Fund

Following the completion of the Stork transaction, the Candover 2005 Fund is 72% committed and marketing of a €5.0 billion successor fund, the Candover 2008 Fund, has now commenced.

Outlook

Large deals aside, the private equity market is continuing to display resilience, and despite the ongoing uncertainty in the financial markets, our enhanced European network continues to generate a steady flow of investment opportunities. Our focus on established businesses with good growth prospects and strong management teams, combined with our reputation for prudent deal structuring and use of leverage will, we believe, stand us in good stead over the coming year.

Colin Buffin
Managing Director
Candover Partners Limited
31st March, 2008

Marek Gumienny
Managing Director
Candover Partners Limited
31st March, 2008