Tue, 07/04/2009 - 07:00
There was once a time when taking a pause in investment activity would have meant missing plethora of missed opportunities. But in an economic climate where every area of financial business has been hit by the liquidity crunch, it could be the key to survival.
That's what investors seems to have decided, anyway, about Candover Investments, the UK-listed private equity investment trust, whose shares rose 17 per cent on Monday after the Candover group announced it was suspending investment from its 2008 fund for six months while it 'explored options for its future'.
The group is struggling to survive after the listed company failed to make good on its EUR1bn commitment to the EUR3bn 2008 fund. 'We have now reached formal agreement with the limited partners for the 2008 fund to suspend its investment activity for up to six months while we explore all the strategic options available and continue to stabilise our financial position,' said chairman Gerry Grimstone (pictured).
The only investment made so far out of the 2008 fund is the GBP1.6bn acquisition last April of oil services company Expro International, made jointly with Candover's 2005 fund. Candover says that henceforth LPs will pay management fees based only on the Expro investment rather than the full value of the fund's commitments.
Meanwhile, Candover is looking to sell its controlling 67 per cent stake in energy consultancy Wood Mackenzie, which is reported to be looking for as much as GBP650m from an acquirer. And lacking resources to invest in its own portfolio companies, Candover is seeking a third party to inject up to EUR500m into German publisher Springer Science and Business Media.
Last month, Candover confirmed that it had received a number of potential offers for the listed business, whose share price has fallen from near GBP20 to GBP1.32 over the past year. It could also sell its commitments to the Candover funds or the firm's direct stakes in portfolio companies. Either way, one of the best-known UK private equity names has a mountainous task ahead if it to survive in anything resembling its present form.
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