Candover Investments has halted further commitments to its 2008 fund and has revealed a decline in net asset value per share of 50 per cent to 1026p.
Candover Investments has halted further commitments to its 2008 fund and has revealed a decline in net asset value per share of 50 per cent to 1026p.
The company says the decline in NAV was driven principally by significant falls in comparable public company earnings multiples which are used to value investments.
No final dividend will be paid and, consequently, the dividend paid for 2008 is 22p per share compared with 60p per share in 2007.
The firm says it is not currently in a position to make any further commitment to invest alongside the present 2008 fund beyond its existing investment in Expro.
It is therefore in discussions with the limited partners of the 2008 fund with regard to a restructuring of the fund, which may include a temporary suspension of the investment period.
Its focus for 2009 is to reinforce the financial position of Candover to enable the value inherent in the 2001 and 2005 funds to be realised in the medium to longer term.
There will also be a reduction in staffing levels to reflect the current business outlook and its Asian and Eastern European operations will either be put on a self-financing basis or closed down.
Gerry Grimstone, chairman of Candover Investments (pictured), says: ‘2008 has been a very tough year for private equity. Candover has inevitably been caught up in the turbulence and our financial position has weakened. The value of our portfolio has been severely impacted by the decline in multiples of public market comparables. In addition, our position has been affected by a lack of realisations caused by the dramatic effect of the global economic crisis. While we are not in breach of any financial covenants, we will be engaging in discussions with all our lenders in order to re-establish our financial flexibility for the longer term.
‘As a result of this market turmoil, we are not currently in a position to make any further commitment to invest alongside the 2008 fund beyond our existing investment in Expro. We are therefore in discussions with the limited partners in the 2008 fund regarding a restructuring of the fund, which may include a temporary suspension of the investment period until such time as these matters have been resolved.
‘The prospects for the private equity industry have altered considerably over the last six months. Our priority now is to reinforce the financial position of the firm, so that the value which we believe is inherent in our investments in the Candover 2001 and 2005 funds can be realised for shareholders over a period of time. We will also be examining the various strategic options potentially available to us.
‘In the circumstances facing the company, it is clearly not appropriate to pay a final dividend.’
Colin Buffin, managing director of Candover Partners, adds: ‘The impact of the global economic downturn is evident in our year-end valuations announced today, which are derived principally by applying public market comparable multiples. The fall in valuation multiples compounded by the impact of leverage in the capital structures has resulted in a significant decline in the NAV. However when stock market valuations recover, we expect to see equity value returning. We remain convinced that there is significant longer-term value in our investee companies.
‘The current global financial problems do not seem likely to be resolved in the short term and our focus going forward, therefore, is on working closely with our portfolio companies and their management teams to maximise the value of our investments.’
