CVC dispels post-crunch woes

CVC Capital Partners has pumped a staggering EUR2.4bn into Evonik Industries AG, by far the largest private equity investment in the DACH region since the onset of the credit crunch. The German diversified industrial group has allowed CVC to acquire a 25.01% stake from vendor RAG Foundation. Many expect this transaction to remain the largest for some time.

Not only did CVC beat off competition from heavyweights Blackstone Group, Bain Capital and Kohlberg Kravis Roberts, but it also enlisted a total of eight banks to provide the EUR1.2bn debt package. Bank of Ireland, Calyon Deutschland, Landesbank Baden-Wurttemberg, Hessische Landesbank, Lloyds TSB Bank, Mediobanca International, Raiffeisen Zentralbank Osterreich AG and WestLB joined in the financing.

The deal is yet another example of how GPs are innovating to keep up dealflow in today's climate. Recently Apax Partners and JC Flowers both led PIPE deals, which traditionally had been fairly rare in the large buyout space. This latest Evonik deal sees CVC take only a minority stake, as opposed to the majority stakes normally favoured by mega-GPs. To boot, the deal with CVC wasn't long in the making; Evonik had originally planned to list this year, but adverse market conditions forced the company to postpone the plans, with RAG instead settling on selling a quarter of the company now, and intending to list the company jointly with CVC in the medium term (see page 37).

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