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EUROPE - Candover to "substantially" reduce fund

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Following nearly 12 months of difficulties that stemmed from its parent's liquidity issues at the beginning of the year, Candover has today announced it will "substantially reduce" the size of its 2008 Fund, which had targeted EUR 5bn and reached a first close of almost EUR 3bn just weeks before Lehman's collapse. The reduction will release all investors, include its listed parent, from a "significant proportion" of undrawn commitments.

The announcement confirms that Expro will remain the 2008 Fund's only deal. Candover led the EUR 2.6bn buyout of the UK oilfield services business in June 2008 using EUR 195m from its 2005 Fund and EUR 306m from its 2008 Fund. The deal also involved AlpInvest and Goldman Sachs Private Equity, with the three private equity backers acquiring a collective 22.9% stake. Debt was provided by Royal Bank of Scotland, Lloyds TSB, Royal Bank of Canada, HSBC, and DnB NOR Bank.

Commitments to the 2008 Fund will be scaled back "pro rata subject to an appropriate follow-on reserve of EUR100m" which, alongside additional funding from the 2005 Fund, should allow the investment to be viewed as a going concern. Parent Candover Investments will not contribute to this follow-on.

It has not been an easy year for Candover. In February, the firm wrote off their investment in Italian yacht manufacturer Ferretti and by April it had announced the suspension of investment from its 2008 fund. In October, the buyout house lost its stake in UK lab testing business ALcontrol.

A further announcement is expected from Candover on 8 January 2010.

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