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Candover admits flaws in existing structure

As it continues to mull its future business model, the London-listed private equity investor sees the departure of long-time managing director Colin Buffin and finance director Tian Tan.

Candover Investments, the London-listed parent of UK buyout shop Candover Partners, has made a series of changes to its management team as it continues to review the relationship between the management company and its parent.

Currently Candover Investments invests, realises and recycles profits through funds managed by Candover Partners, a wholly owned subsidiary. This model “has been seriously tested by the global financial and economic crisis”, the firm said today in its interim results statement, adding that the fiduciary duty owed by Candover Partners to its LPs had the potential to create “an undesirable conflict” between the interests of Candover Investments shareholders and other LPs in Candover funds.

The problems with the structure were thrown into sharp focus last year. As the private equity exit environment slowed, so too did cash distributions to limited partners. With dramatically reduced cash coming in, Candover Investments was forced to downsize dramatically its commitment to Candover Partners’ latest buyout fund.

John Arney, who has been with Candover Partners since 2002, has officially taken the helm as managing partner of the business, taking over from long-time senior managing directors Colin Buffin and Marek Gumienny.

Gumienny has become chairman of Candover Partners. Buffin, meanwhile, will leave the firm once it has decided what to do with its 2008 buyout fund, which has currently suspended its fundraising efforts and investment programme.

Tian Tan, Candover Partners’ finance director, has stepped down to be replaced by Matthew Harrison, who joined the firm in 2003 as financial controller.

Malcolm Fallen, who joined the firm in March 2009 to lead a strategic review of the business, has been confirmed as chief executive officer of listed parent company Candover Investments.

The future of the firm’s suspended buyout fund is is currently under review, with management hoping talks with limited partners will be concluded “within the weeks ahead”.

“We hope that [the talks] will lead to the emergence of a smaller fund but we do not yet know that this will be the case. In any event, Candover Investments will not be an investor in a new Candover 2008 Fund,” the firm said in a statement.

Candover’s recent £553 (€639 million; $916 million) million sale of consulting business Wood Mackenzie to Charterhouse Capital Partners and the sale of three limited partner interests in French buyout funds for £5.3 million have helped put Candover Investments on a more secure financial footing.

As of press time, the firm’s shares had risen 5 percent in today’s trading to £4.33.