Australian CVC boss quits as firm struggles with Nine debt
SYDNEY/HONG KONG |
SYDNEY/HONG KONG (Reuters) - The Australian head of CVC Capital Partners has resigned, as the private equity firm faces losses of up to $1.8 billion from its debt-funded acquisition of television network Nine Entertainment Co Pty Ltd.
The loss would be the biggest ever for a single buyout deal in Asia and the departure of Adrian MacKenzie, a key player in the A$5.3 billion ($5.6 billion) purchase of Nine, comes amid talks that could see Nine fall into the hands of its lenders and wipe out CVC's equity.
The news also comes as sources identified Singapore sovereign wealth fund GIC and Kuwait Investment Authority (KIA) as being among investors that have taken a combined 10 percent stake in CVC, one of the world's largest private equity groups.
MacKenzie, a former investment banker who moved from London to head the Australia unit in 1999, was a 17-year CVC veteran and had also been a member of the CVC board since 2007.
His departure comes ahead of scheduled meetings with investors in Hong Kong next week, said sources who declined to be identified as they were not authorized to speak about the matter publicly.
"I leave a highly capable team in place which will continue to manage our investment portfolio in Australia, including Nine Entertainment," MacKenzie said in a statement.
The potential loss on Nine has affected four of CVC's funds, including two in Europe, and caused the firm to pull back from Australia.
Goldman Sachs and CVC have proposed a debt-to-equity swap for Nine, which like other media companies has seen profits tumble as advertising revenues followed viewers and readers online. One source has said that there are hopes that the parties will come to an agreement by mid-November.
CVC was the first big international private equity firm to set up shop in Australia, notching its first success in 2004 with the float of clothing group Pacific Brands.
WEALTH FUNDS SCOOP
CVC, which has investments in Formula One and theme parks group Merlin Entertainment, sold a 10 percent stake to new powerful backers, informing all of investors of the deal in June, a source familiar with the matter said.
CVC has declined to comment on the investors. GIC declined comment, while KIA could not be reached for comment.
The deal is in keeping with a trend among leading private equity firms to deepen their relationships with their largest and wealthiest investors.
By buying into the management company alongside the private equity partners, investors can get first refusal on investments alongside funds in deals and earn a slice of lucrative performance fees, also known as carried interest.
China sovereign wealth fund CIC, GIC, KIA and recently Qatar sovereign fund, Qatar Investment Authority (QIA), have all made similar investments.
Last year, GIC and Kuwait Investment Authority bought a 4.5 percent stake in TPG Capital, while CIC in 2007 acquired around 10 percent of Blackstone Group for $3 billion ahead of that firm's IPO.
QIA recently acquired 22 percent of China private equity firm CITIC Capital Holdings.
GIC, which industry experts estimate manages at least $300 billion in assets, has invested billions of dollars in banks and private equity in the past few years. It is the biggest shareholder of UBS with a 6.45 percent stake.
It has 11 percent of its assets in the category it defines as private equity and infrastructure. GIC does not disclose its asset size or key investments.
CVC, which invests in Asia from a $4.2 billion fund raised in 2008, is expected to begin raising new funds for Europe and Asia towards the end of the year, or early next year.
(Additional reporting by Saeed Azhar in SINGAPORE and Dinesh Nair in DUBAI; Editing by Denny Thomas and Edwina Gibbs)
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