LONDON (Reuters) – European private equity firm Candover is considering winding down its existing funds as a last resort, a source close to the situation said on Friday.
The source said going into run-off — where a private equity firm ceases investing and runs its portfolio companies until they can be sold — was only one option available, with a number of other options being considered.
“Run-off is the end game rather than the starting point. Clearly it is something that would be considered once you have exhausted other options,” the source said.
Market participants have speculated that other options could include running a smaller version of the planned 5 billion euro ($6.32 billion) 2008 fund, a sale of the business, a restructuring of the listed vehicle, or a capital-raising to allow the listed company to continue investing alongside other investors.
Candover Investments Plc CDI.L, the listed parent of buyout firm Candover, earlier this week said it would stop investing in the 2008 Candover fund, having previously pledged 1 billion euros. [ID:nLR493383]
As the credit crunch has made company sales all but impossible, returns to investors have dried up, severely restricting the ability of Candover Investments to invest in its own fund.
Candover has drafted in Merrill Lynch and Lexicon for advice.
The source said discussions with investors would take weeks, rather than months, to conclude. ($1=.7909 Euro)
Bt Smon Meads
Editing by Sharon Lindore