CVC's Amsterdam IPO move adds impetus to calls for LSE reform

The private equity firm has chosen Amsterdam as the venue for its planned initial public offering, the Financial Times reported over the weekend. It added CVC has informed investors of its plans, however the firm has not commented or confirmed the decision yet. The PE house also has yet to comment on the structure of the listing or an IPO time frame, the FT reported.

Freshfields Bruckhaus Deringer is taking legal duties for the longstanding client CVC, while Linklaters is acting for the underwriters, five sources said.

CVC is also being advised by Goldman Sachs, JPMorgan and Morgan Stanley, it was previously reported.

CVC's sale of a minority shareholding to Dyal Capital in 2021 valued the PE firm at approximately EUR 15bn, the FT added.

Friendly exchange
The sources largely attributed the PE firm's penchant for Amsterdam to its flexible regulatory environment.

"The Netherlands is more amenable," a source said. "The UK has stricter rules around weighted voting and classes of shares that make the businesses highly dependent on shareholder approval."

In addition, another advisor said London might require more disclosures, for instanced around carried interest.

Amsterdam has a better reputation as a simpler listing venue, the sources added.

London also requires shareholder approval for acquisitions and related party transactions for companies that have a premium listing; in Amsterdam this is not needed.

"Basically, there are additional obligations once you are listed in London that you don't have in Amsterdam," another source said; standard listing requirements are similar in both jurisdictions.

Amsterdam's track record of IPOs in the sector is also a likely draw for CVC. Other PE firms have listed in Amsterdam in the past, for example in 2009 when KKR became a publicly quoted company by merging with its listed Amsterdam fund.

An Amsterdam-based advisor said he sees CVC's move as a "major coup" for the exchange and is a testament to "friendly' governance."

CVC is an attractive name for European investors given the growth in private equity flows in recent months.

"There is a huge amount of capital available to be deployed," a third advisor said. "This is attractive to investors and it's the right time for a private equity company to go for it."

Another blow for the LSE
The sources agreed that CVC's decision was not likely a direct consequence of Brexit, with Amsterdam's regulatory advantages long pre-dating the decision by the UK to leave the EU.

But the move is still seen as a blow to London as an exchange.

"It is the type of listing London would want to have, and it will be seen as a loss," a sixth advisor said.

The LSE has been taking consistent measures to make itself more appealing for companies looking to list, especially tech ventures that still see the US as a landing ground.

"CVC is a longstanding London business. Every high profile deal the UK loses to Amsterdam, is not good," the first source said of the British firm, which was launched in 1981 and counts around USD 122bn assets under management.

"If smart operators like CVC are seeing Amsterdam as more attractive, then this becomes a self-fulfilling dynamic."

But for the sixth source, the decision might say more about CVC's intentions for the long term.

"The point is, if CVC thinks its future acquisitions are going to happen in Europe, then it makes sense for them to be listing in Amsterdam," he said.

The performance of Bridgepoint, which listed on the London Stock Exchange last year might have made CVC think about a deal in the UK, another advisor noted. The firm's YTD share price as of today is down by 39%.

CVC declined to comment. Freshfields Bruckhaus Deringer and Linklaters declined to comment.

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• Topics
• GPs
• UK / Ireland
• Benelux
• Mergermarket
• IPO
• CVC Capital Partners
• Freshfields Bruckhaus Deringer
• Linklaters