CVC/DIF Capital: infrastructure deal builds assets under management ahead of IPO

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Infrastructure funds reside by the maxim “construct it and they’re going to come”. Personal capital methods have adopted go well with, with restricted companions in search of to construct infrastructure positions. CVC, the personal fairness fund group, is the newest to assemble plans. It has acquired a majority stake in Dutch infrastructure fund DIF Capital Companions for about €1bn.

There are good causes for CVC’s determination. Infrastructure is a hotspot for deal making. Property below administration within the sector expanded at a 17.8 per cent compound annual price within the decade to 2022, in keeping with Preqin information. This exceeds different personal funding methods. Buyers respect diversification in broader portfolios. Returns from infrastructure don’t are likely to correlate with bonds and different equities.

CVC was beforehand centered on extra typical buyout methods, for which it has a great report. It was in a position to increase €26bn this 12 months for the biggest buyout fund ever. However it’s shifting in direction of a multi-strategy strategy in a bid to extend AUM. In 2021, it acquired Glendower Capital, a specialist in buying and selling second-hand stakes in personal fairness funds.

These diversification strikes can all be tied to CVC’s plan to record its shares. The world’s largest personal capital asset gatherers, equivalent to Blackstone and KKR, commerce publicly and provide a spread of methods and merchandise. Shopping for DIF, which has €16bn of AUM, not solely provides one other technique however helps to bulk up CVC’s personal €140bn AUM.

Ought to it proceed with an inventory, CVC can count on a excessive valuation. In 2021, it bought a minority stake to Blue Owl’s Dyal Capital group at a valuation of €15bn. Admittedly, this was in a halcyon interval for personal capital, nevertheless it might preserve this if it could actually broaden its AUM.

DIF shall be left to function as independently as attainable. CVC won’t totally personal the group till 2028. That independence, which has labored effectively with Glendower, is probably going to assist CVC preserve a great report.

That report means CVC’s fundraising success stands out. Rivals have struggled. They’ve more and more been pressured to supply payment reductions. Within the first half of the 12 months, fundraising was down greater than a 3rd on the 12 months earlier than, in keeping with Bain.

CVC understands that natural progress of AUM has limits. Erecting the scaffolding for added methods is smart.