Candover latest to downsize fund

UK buyout house Candover has become the latest large-cap investor group to succumb to the pressures facing firms at the top of the market by announcing a reduction in the size of its latest fund.

The fund, the firm's fifth, had quietly held a first closing on around £2.8bn in August 2008 and was seeking to raise around EUR5bn. According to the announcement, the fund's target will now be substantially reduced, which will provide many incumbent LPs with the opportunity to reduce the size of their commitments.

The firm's listed arm, Candover Investments Plc, has confirmed that it will significantly reduce its contribution to the vehicle, which currently stands at around EUR1bn.

Like many LPs, the listed business had followed an over-commitment strategy in recent years based on the assumption that dividends from previous funds would finance draw downs. The share price has fallen dramatically in recent months and currently stands at around 380p - 80% less than its September peak of almost £23.

In conjunction with the downsizing, Candover will adapt its investment strategy to target smaller investments. There has also been speculation in the press that a wider restructuring may take place at the firm in the near future, which could see it launch a rights issue and renegotiate its bank debts.

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