CVC announces final close of $3.5b on fourth Asian fund

CVC Capital Partners Asia Pacific IV, which includes a GP commitment of $200 million, will invest in businesses that benefit from increased consumer affluence and domestic demand in Greater China, Southeast Asia and Japan and Korea.

Fund IV is smaller than its 2007 vintage predecessor, which reached a final close of $4.1 billion in April 2008, but the geographical remit for is smaller, with no Australia allocation this time around.

According to information disclosed by Pennsylvania Public School Employees' Retirement System (PSERS) last December, when it agreed to invest $100 million in the fund, CVC will pursue deals of $60-200 million, targeting companies with enterprise values of $150 million to $1.2 billion. The target return is 20-30% gross IRR and a gross multiple of 2-3x.

As of June 2013, Fund III had delivered a net IRR of 16.1% and a net multiple of 1.5x. One of the stand-out investments from the fund is Matahari Department Store, in which CVC bought a 72.6% interest in 2010 for an enterprise valuation of $892 million. In March of last year, the PE firm and its local partner sold about 46% of Matahari for $1.3 billion through a share placement that valued the company at close to $3.3 billion.

CVC's first Asia fund, a 2000 vintage vehicle that closed at $750 million, delivered a net IRR of 31.4% and a net multiple of 2.2x. Fund II was problematic, receiving commitments of $1.9 billion in 2005, but as of June 2013, the net IRR stood at -9.6% and the net multiple at 0.6x.

In addition to PSERS, disclosed LPs in Fund IV include Teachers' Retirement Systems of Louisiana, New York State Teachers' Retirement System (NYSTRS), Sumitomo Mitsui Trust Bank and Japan Bank for International Cooperation (JBIC). The Japanese institutions put in $100 million between them. It is said to be JBIC's first commitment to a traditional buyout fund.

The team tasked with investing Fund IV is led by Roy Kuan, Francis Leung and Sigit Prasetya.

"We're entering an exciting new phase with our fourth Asia fund, and are well positioned to react to the changing landscape in Asia, whether that is the nascent buyout market in China, or the shifting demographics across the region. CVC has the local teams, local relationships and extensive global network needed to benefit from excellent opportunities across our core markets," Roy Kuan, a managing partner with the firm, said in a statement.

China's nascent buyout market is already reflected in CVC's recent deal flow. There have been three control deals in the last few months: quick service restaurant operator Da Niang Dumpling Holdings, overseas education counseling service provider EIC, and restaurant chain South Beauty, which specializes in Sichuan cuisine.

In the past 12 months, KKR, MBK Partners, Affinity Equity Partners, RRJ Capital have all closed pan-regional funds of $2.7 billion or more. The Carlyle Group and TPG Capital remain in the market with their most recent Asian vehicles, although sources say the latter will reach a final close of $3.3 billion this week.

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• Topics
• Fundraising
• Greater China
• North Asia
• Southeast Asia
• Buyout
• Asia
• Fundraising
• CVC Capital Partners
• buyout