IPO of super investor CVC
A single blue flag with CVC in white letters was hung out on the facade of Beursplein 5. After previous attempts in May 2022 and November 2023, investment company CVC Capital Partners today quietly made its debut on the Amsterdam Exchange. As usual with closed corporate culture, the new exchange fund will refrain from a press conference and the usual gong ceremony. Nevertheless, the introduction has been a success. CVC raised €2.3 billion with the IPO. A small part of this concerns the issuance of new shares, while the majority concerns shares offered by some minority shareholders. Private investors cannot participate; the sale is only open to institutional investors. After the IPO, CVC now appears to be worth €17 billion.
Citicorp Ventures Capital (CVC), which, as the name still suggests, is a spin-off of the American banking group Citicorp that was formed in 1993, makes its money by buying and reselling companies. It has approximately 1,150 employees and operates from London and Jersey but is formally based in Luxembourg. In the recent past, the buy-out fund did good business with, among other things, the resale of the company behind Formula 1 as well as more well-known Dutch companies such as Kwik-Fit, C1000, Beter Bed and VolkerWessels. Mistakes can occasionally be made as well though, such as the case of the takeover of waste giant Van Gansewinkel.
Some people have great difficulty with private equity companies. In their view they add little value to the economy and society and are mainly focused on generating profits for the partners. They call them ‘locusts’ who strip companies of valuable assets and load them with large debts before selling them on for huge profits. It should, of course, be noted that not all private equity funds should be tarred with the same brush. The question is whether CVC can also be regarded as a locust. Pension funds, insurers and wealthy private individuals who invest a lot of money in it certainly don’t think so and, as customers, are happy to benefit from the lucrative revenue model of the private equity fund. And not without reason, experience shows that investors at CVC earn back three times their investment an average.
Whoever is right, it is remarkable that the Amsterdam stock exchange seems to be financing what could be considered a competitor with the IPO of investment company CVC. CVC has already taken more than twenty companies off the stock exchange in its history. The question is whether this will be the new reality on the Dutch capital market as smaller funds increasingly enjoy the ‘peace’ offered by private equity when compared to the regulatory burden of the public stock exchange.
