UPDATE 2-Cinven aims for 3-4 European deals this year

Thu Mar 14, 2013 10:25am EDT

* Closes 5th fund after hitting 5 bln euro target

* Plans to invest 800 mln euros to 1 bln euros this year

By Arno Schuetze and Kylie MacLellan

FRANKFURT/LONDON, March 14 (Reuters) - Private equity firm Cinven said it would make three to four acquisitions in Europe this year after raising 5 billion euros ($6.5 billion) for a buyout fund, reaching its target in a tough market for fundraising.

Cinven is likely to invest 800 million to 1 billion euros in equity in 2013, in line with normal annual investment plans, partner Bruno Schick said in an interview.

The largest private equity firm with a purely European focus, Cinven buys into sectors including healthcare; business, consumer and financial services; industrials and technology; media and telecoms.

Its announcement confirmed a Reuters report on Wednesday that it had reached 5 billion euros for its fifth fund , although that is less than the 6.5 billion euros it pulled in for its fourth fund in 2006.

"We are very happy to have reached the target," Cinven Managing Partner Hugh Langmuir, who has been with the firm since 1991, told Reuters. "The fundraising market has been the most challenging I can remember."

Since the financial crisis, big institutional investors have been putting less money into private equity and becoming pickier about the firms they do back. Many private equity firms have had to scale back fundraising plans, in contrast to the pre-crisis boom years when they easily beat their targets.

Cinven's London-based rivals Apax and Permira are struggling to reach their fundraising goals, for example, while Nordic Capital cut its target to 3 billion euros from an initial 4 billion late last year.

Private equity funds in Europe raised nearly $52 billion in 2012 compared with an annual average of more than $100 billion during the 2006-2008 boom, according to Thomson Reuters data, as the euro zone debt crisis put the brakes on fundraising.

Private equity firms use their funds to buy businesses aiming to sell them later at a profit.

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Cinven said 14 percent of its Fifth European Buyout Fund has already been spent, following investments last year including in healthcare firms Mercury Pharma and Amdipharm.

The fund's share of investors, or limited partners (LPs), from the Americas amounted to about 50 percent, topping the 42 percent in its fourth fund. The fifth fund also included more commitments from sovereign wealth funds.

"Despite the tough macroeconomic environment in Europe, people have backed our ability to find good companies in Europe and grow them," said Langmuir. "We are busy, we think the pipeline is reasonably robust. We are looking at a number of opportunities across the European continent."

On average, Cinven's 82 transactions over the last 25 years have generated an annualised return of 41 percent, partner Schick said. "The targeted returns have not changed," he added.

Since the start of 2011, the company has returned 5 billion euros to investors, including proceeds from the sale of the aviation business of Italy's Avio to General Electric and the listing of Dutch cable operator Ziggo.

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