Firms to watch in 2010

CVC Capital Partners

Last year saw UK buyout house CVC dominate the news headlines, coming narrowly close to completing a number of big deals of which only one closed, suggesting the firm has both the capital and incentive to invest in 2010. It lost out on its £3bn offer for Barclays' exchange-traded funds business iShares in March of last year, as well as dropped its £765m joint bid with the Cosmen family for beleaguered UK transport group National Express in October, after three long months of due diligence. Its sole win was its acquisition of the CEE operations of brewery Anheuser-Busch InBev (AB InBev) for $2.23bn, a transaction which saw the procurement of approximately $1bn in senior debt.

LDC

With 16 deals under its belt in 2009, LDC completed the largest number of transactions of any private equity firm last year, with plans to keep up the deal pace for 2010, according to the firm's London managing director Peter Brooks. One of its most impressive deals in 2009 was the £115m buyout of financial services support specialist 1st-The Exchange, which saw the investor commit £42m and secure a senior debt package from Lloyds TSB Corporate Markets, RBS and HSBC. Last year also saw the private equity firm focus more heavily on operational turnarounds, positioning the investor as the one to watch this year with many expecting more businesses to suffer throughout 2010. LDC worked with model retailer Modelzone's management for 18 months before backing the £5.6m MBO of the company in July.

Palamon Capital Partners

One of Europe's few GPs widely deemed well placed to hit the fundraising trail in 2010, it actually did deals in 2009, instead of merely shouting loudly about it being a good vintage, as was the case with many GPs last year. The growth capital specialist clocked up two deals in one week at the end of 2009: the £136m buyout of ADP alongside LDC and AlpInvest, and the expansion capital injection for Polikum, a German health clinic operator. The two deals take Palamon's latest EUR670m fund beyond the 60% investment threshold, with another deal expected to close in January, putting the firm on course to raise more than EUR1bn for its next vehicle. They've beefed up their team - seven new faces since 2007 - with Candover's Owen Wilson the latest to join the roster.

ICG

Another firm that had a roller-coaster year that should see it do well in 2010. In June the firm reported an annual loss of £67m, and a month later launched a £351m 7-for-2 rights issue. With regards to its portfolio, UK bingo operator Gala is attempting a restructuring (though lead GPs were still in disagreement at the time of going to press) while Sweden's Dometic was in restructuring talks.

The year ended very positively: by November, shares in the listed lender were up 4% after ICG announced its bad debts had peaked, and in December it achieved its largest ever capital gain at £68m with the £975m sale of Marken to Apax Partners.

The firm is set to be the unintended beneficiary of KKR's newest venture: the buyout behemoth is raising a mezzanine fund. While it may sound like unwelcome competition from the world's largest private equity brand, it could, in fact, be that KKR is able to educate investors that hadn't previously considered intermediate capital (lured in by KKR's brand), giving ICG the chance to then follow up with its strong mezzanine reputation.

RJD Partners

With their latest fund 40% invested, the firm is among the "lucky few" according to modern theory on GP robustness. To boot, RJD has been hiring at around the investment director level, another sign the firm is set for a busy 2010. At least one exit is on the cards for the year, with another likely to "start exit proceedings". This would be welcome respite from a dry 2009: the firm toiled away at a hat-trick of deals, one of which came within a week of completion, but none of which closed. The firm suffered the loss of managing founder Duncan Johnstone in July 2009, though no key-man clause was triggered.

Inflexion Private Equity

Inflexion managed a hat-trick of stellar exits in 2009 and successfully raised a £77m LP co-investment fund, giving it a lump of cash to invest during 2010. The exits weren't just about quantity either - one alone generated more than 12x money for Inflexion, when it sold Viking Moorings to HSBC Private Equity. Earlier in 2009, it sold Ilchester Cheese for 2x money and HKI for 2.7x money. The firm also got two deals under its belt when it backed National Accident Helpline alongside LDC in October, and travel business Griffin Global Group in the middle of December. It beefed up its origination team in the autumn with the appointment of Angela Galbraith from KPMG.

Apax Partners

The firm seemed to spend most of the year firefighting, but ended on a number of high notes. Throughout the course of 2009, three partners left (Stephen Green, Michael Grabiner and Alex Fortescue) while another, Richard Wilson, was named successor to 3i's Russell as EVCA chairman. It was tied to a number of company bids, including Italy's Safilo and Kedrion; UK's Synovate and Pets at Home; Germany's ratiopharm and Springer, which it recently lost out to in favour of EQT. It lost its stakes in the UK's Streetbroadcast and Incisive Media, as well as France's Morgan. It successfully led debt restructurings for NXP and is going through the same process for HIT.

On the bright(er) side, Apax's portfolio company TDC sold its stake in a Swiss subsidiary to a trade buyer, while the private equity firm also closed the UK's largest deal of the year when it bought Marken from ICG in December for £975m, underwriting the entire structure with a view to bringing on leverage before it closes (subsequently bringing on board Lloyds with a £300m package). The buyout house also created a permanent capital vehicle by selling a 10% stake in its management company during the year to GIC, Future Fund and CIC.

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