Private Equity Giant CVC Sells Stake to KIA, GIC

CVC Capital Partners, one of the biggest private equity firms in the world, is selling a 10% stake to three sovereign wealth funds, Reuters has reported.

(September 20, 2012) — UK-based private equity firm CVC Capital Partners has sold a 10% stake of the firm to a group of powerful, private investors, including the Kuwait Investment Authority (KIA), the Government Investment Corporation of Singapore (GIC), and an unnamed Asian fund.

CVC Capital — which manages capital on behalf of around 300 institutional, governmental and private investors worldwide — was formerly the private-equity business for Citicorp, now Citigroup Inc. It bought about 63% of Formula One in 2005 and 2006. In May and June, the private equity firm sold a $2.1 billion stake to Waddell & Reed Financial, BlackRock, and Norges Bank Investment Management. These deals valued the auto-racing company at $9.1 billion, according to Bloomberg.

CVC’s move to sell a chunk of its parent company to a group of private investors follows similar actions by rival Apax Partners. In February 2010, buyout firm Apax Partners sold off a 10% stake to investors including the China Investment Corporation, China’s sovereign wealth fund.

Leading private equity firms are increasingly seeking to deepen relationships with their largest investors to ensure their survival. In June, for example, Kohlberg Kravis Roberts & Co. won a $225 million commitment from the Oregon Investment Council for the investment firm’s buyout fund investing in Asia.

KKR manages a total of nearly $3 billion, or 6%, of Oregon’s roughly $58 billion in pension fund investments. The council, which manages assets for the Oregon Public Employees Retirement Fund and Oregon’s Common School Fund, revealed at the time that it was committing $6 billion for KKR Asian Fund II LP to invest across Asia. Oregon’s pension was an investor in the first Asia fund operated by KKR, which has posted net returns of 19% in the last roughly three decades.