Candover Plans to Raise EU5 Billion Fund, People Say

Candover Plans to Raise EU5 Billion Fund, People Say

Feb. 8 (Bloomberg) -- Candover Partners Ltd. is preparing to raise more than 5 billion euros ($7.2 billion) for its biggest leveraged buyout fund even as the pace of deal-making slows, said three people with knowledge of the decision.

Candover is canvassing potential investors for a fund that it intends to gather in the first half of this year, said the people, who declined to be identified because the plans are secret. The London-based firm amassed 3.5 billion euros for its last fund that closed in 2005.

Buyout firms Kohlberg Kravis Roberts & Co., PAI Partners and Bridgepoint Capital Ltd. also are seeking money for European takeovers this year. After the collapse of the subprime mortgage market in the U.S., banks are struggling to clear a backlog of about $230 billion of finance they committed to buyouts, damping their interest in extending more credit for takeovers.

``It's more difficult to raise money than it was, and it will take them a little longer than in the past,'' said David Currie, head of a private equity unit that manages about 5.2 billion euros at Standard Life Investments in Edinburgh. ``People are still trying to do deals, though not necessarily at the larger end of the market.''

The cost of loans used to fund LBOs has more than doubled since August. The pace of acquisitions by private equity firms slumped in the second half of last year, with companies announcing $202 billion of deals, about 66 percent less than in the record first six months, data compiled by Bloomberg show. The firms have announced $14.8 billion of deals in 2008.

Piers Dennison, a Candover managing director, didn't return calls to his office seeking comment. Susannah Voyle, a spokeswoman for the firm, declined to comment.

Rival Funds

New York-based KKR is seeking 7.7 billion euros for its third European pool, while Paris-based PAI is gathering as much as 10 billion euros for its Europe V fund.

Candover's biggest investments include postal operator DX Group, EurotaxGlass, publisher of Glass's guides, and Italian yachtmaker Ferretti. In November, the firm agreed to buy Stork NV for 1.5 billion euros after a five-month battle for the Dutch maker of aircraft parts and food-processing equipment.

Candover Investments Plc, a publicly traded investment trust, committed 500 million euros to Candover's 2005 fund. The shares rose 3.2 percent to 2,136 pence as of 9:15 a.m. in London.

Other investors in Candover's 2005 pool included the California Public Employees' Retirement System, Princeton University and the Metropolitan Museum of Art.

Candover's 2001 fund generated a 30 percent net internal rate of return for its backers, according to Calpers's Web site.

BLOOMBERG