CVC Capital Partners has closed its fourth Asia private equity fund at $3.5 billion, which will invest in consumer-oriented deals in Greater China, Southeast Asia, Japan and Korea.
CVC Capital Partners Asia Pacific IV raised the figure in just under a year and is understood to have been oversubscribed, with pensions and sovereign wealth funds among the biggest investors.
The New York State Teachers’ Retirement System and Pennsylvania Public School Employees’ Retirement System reportedly each committed $100 million, and the Teachers’ Retirement System of Louisiana $75 million.
This March, the Japan Bank for International Cooperation said it had teamed up with Sumitomo Mitsui Trust Bank to invest a total of $100 million in Fund IV.
A breakdown of the investments by geography was not provided, although it is understood that there was an increase in contributions from Asia and the Middle East for Fund IV compared to its predecessor.
AsianInvestor had earlier reported that London-based CVC had raised money by selling a 10% stake in its business to a trio of investors thought to be Singapore's GIC, the Hong Kong Monetary Authority and Kuwait Investment Authority. But it is not clear whether any of the three sovereign entities allocated to Fund IV.
The latest vehicle is smaller than predecessor Fund III, which closed at $4.2 billion in 2008. Fund III lost A$1.8 billion ($1.6 billion) on an investment in Australian network Nine Entertainment, resulting in CVC’s exit from the Australian market last year.
However, publicly available documents show that Fund III had a 16% net internal rate of return as of June 30, suggesting that successful deals elsewhere in Asia made up for the losses in Australia.
CVC’s partial exit from Indonesia’s Matahari Department Store chain last year raised about $1.3 billion. It acquired an 80% stake in Matahari in 2010 for $770 million and continues to hold an undisclosed minority stake in the company.
Fund IV will target sectors driven by domestic demand, such as consumer services, healthcare and financial services.
CVC usually targets the mid-market buyout space, along with joint control and structured minority investments. The latter two categories would be more feasible in certain markets, such as Southeast Asia and China, where PE investors are typically only able to acquire minority stakes in companies.
The firm takes board representation proportionate to its ownership stakes in companies and prefers to have controlling stakes, says CVC Asia managing partner Roy Kuan.