Private equity firm CVC is restructuring its US operations and is actively seeking to acquire a private credit firm, as it looks to strengthen its position in the American market following a series of underperforming investments, according to a report by the Financial Times.
The Amsterdam-listed firm has replaced Chris Stadler, who had led its North American private equity business for 18 years, with new co-heads Lorne Somerville and Cathrin Petty, both of whom were previously based at CVC’s London office.
As part of its strategy to expand in the US, CVC is exploring the acquisition of a private credit firm, after its attempt to buy HPS Investment Partners was blocked by HPS’s sale to BlackRock last year. Additionally, the firm is seeking to invest in private capital groups with a focus on real estate outside Europe.
CVC’s shares have surged by more than 50% since it went public last year, and the firm has accumulated €191bn in assets under management. Its notable acquisitions include a stake in Formula One. However, replicating its successful model in Europe has proven more challenging in the US.
Following the reshuffling, Stadler will move to the role of chair for North America at CVC, a position that does not directly involve securing new deals. He will remain on the investment committee and focus on improving returns from existing investments.
The leadership changes come after several investments under Stadler’s watch have underperformed. According to sources, the US market has posed unique challenges for CVC, which has typically thrived in Europe by building long-term relationships and targeting niche investment opportunities. One investor pointed out that replicating this model in the US has been difficult, noting that “the country is a totally different market.”
CVC explained that it was the “right time” for Stadler to step into the chair role and pass the reins to his colleagues, emphasising his ongoing support for the US team’s success.
Some of CVC’s US investments have been successful, with its 2008 vintage fund outpacing its European counterparts. Notable successes include the acquisitions of Authentic Brands Group and ExamWorks in 2021. However, its 2014 vintage fund’s US deals have underperformed compared to European investments, and it’s expected that its 2017 vintage fund could face similar challenges.
CVC has exited just a quarter of the 25 US deals it made through its four flagship buyout funds since 2008. Several troubled investments include ConvergeOne, a US IT services provider that filed for Chapter 11 bankruptcy protection last year after being taken private by CVC in 2019, and Anchor Glass, where CVC injected $50m in 2023 amid negative cash flow forecasts.
CVC also faced challenges with Petco, a pet retailer it acquired in 2016 at a $4.6bn valuation, with the company’s share price dropping 80% since its 2021 IPO, now valued at around $1bn. However, its investment in Teneo, a strategic communications firm, has been a success, with the company’s earnings more than doubling since its acquisition in 2019, despite some reputational controversies.