Candover loses another investment, delays fund decision

Candover Partners has lost its equity stake in ALcontrol, the food and environmental testing laboratory business. The UK-based business underwent a restructuring process that ultimately saw GSO Capital, the credit fund arm of The Blackstone Group and a lender to ALcontrol, seize majority control.

Candover reportedly paid £240 million to buy ALcontrol from fellow European buyout house Bridgepoint in 2004. Candover Investments, the listed parent company that invests in Candover Partners’ funds, had invested £13.2 million in the deal.

Candover had put together a proposal which included an injection of fresh equity into the business, but it was rejected by lenders, according to one source with knowledge of the process. 

A spokeswoman for Candover declined to the comment on the process, but said that as the investment was already being held at a valuation of zero, the loss would not affect the listed firm’s net asset value.

The loss of the ALcontrol stake hits Candover as its future hangs in the balance. The firm is currently in discussions with limited partners of its latest buyout fund, for which it had managed to raise €3 billion in 2008, as to whether the fund has a future and whether Candover Partners, the wholly owned subsidiary of the listed group Candover Investments, should be spun off as an independent management firm.

The 2008 fund’s future is in question because its dominant LP – the listed parent company Candover Investments – said it would be unable to fulfil its €1 billion commitment.

This is the second time this year that Candover has had to walk away from its equity investment in a portfolio company. In February the firm had to bow out of restructuring discussions for Italian yacht maker Ferretti, in which it had held a 50.2 percent stake. Only six months previously, Ferretti had been Candover Investments’ second largest holding, accounting for nearly 11 percent of the listed vehicle’s net asset value.

Earlier this week the deadline that Candover had set itself to agree the fate of its ownership structure and the 2008 buyout fund passed. The firm has now given itself until 4 December.

Despite the ALcontrol news, Candover Investments’ share price rose has risen by more than 4 percent this week to £5.90 since opening on Monday at £5.65.