Candover was formed in 1980 to invest in privately owned businesses and was listed on the London Stock Exchange in 1984. Between 1980 and 2008 Candover invested alongside third party funds raised by its wholly owned subsidiary Candover Partners, relying on the realisation of investments from prior funds to fund its future commitments.
The end of 2008 was an extremely turbulent time for the global economy and in particular for financial markets. Inevitably Candover was caught up in this turbulence and found itself facing a set of challenges it had never faced before. The challenges were how to deal with a rapid fall in the value of its assets, and how to make sure that it had sufficient cash and liquidity to support its ongoing fund commitments at a time when realisations were difficult to achieve.
During 2009 and 2010, the Board focused on taking decisive action to improve Candover’s financial position. It withdrew from the latest fund being raised by Candover Partners and undertook a comprehensive review of strategic options, including considering expressions of interest to buy the Company. The cost base was reduced by restructuring the scope and scale of operations, and Candover Partners was refocused on actively managing the inherent value in the portfolio.
These actions, together with the successful realisation of several investments by Candover Partners, resulted in a substantial improvement in the Company’s financial stability.
By the end of 2010, the Board decided that the best way to optimise value for shareholders would be to remain as a listed private equity investment trust, but no longer to make new investments. Candover’s sole purpose would be to return cash to investors over time as portfolio realisations were achieved by Candover Partners.
In light of this decision, Candover no longer needed a manager with the capacity to make new investments, but it did need a stable manager focused on realising the value in the portfolio. In early 2011 Candover Partners was sold to its management team, who set up a new independent private equity partnership known as Arle Capital Partners. Arle was engaged to manage the portfolio and complete its realisation over time.
Candover also sold a strip of its investments to a third party, which further improved its financial stability by bringing cash onto the balance sheet and reducing net debt. The Board had decided that reducing net debt was an important part of being able to deliver its cash-back strategy and that the sale of the strip was preferable to a highly dilutive rights issue to achieve this.
These disposals, together with the finalisation of a new governance and operating model, were completed in 2011. This provided Candover with a solid base from which to deliver its strategy of realising value. Arle was engaged to manage the portfolio and complete its realisation over time. Arle has managed the portfolio up until 31 March 2017, the point by which all of the Candover Funds had terminated and the majority of the portfolio had been realised.
From 31 March 2017, Candover will manage directly its remaining three investments.