Exclusive: Kuwait, Singapore Buy CVC Stake

Government-backed funds in Kuwait and Singapore have acquired a stake in CVC Capital Partners, the buyout firm which counts Formula One (F1) motor racing and the owner of Madame Tussauds among its investments.

I have learnt that entities connected to the Kuwait Investment Authority (KIA) and the Government Investment Corporation of Singapore (GIC) and an unidentified Asian fund have bought 10% of CVC's management company in a deal which reinforces its status as one of the most influential private investors in the world.

The transaction was struck in June and was outlined to investors in CVC's funds (without identifying the new shareholders) at the time. It was also discussed at the firm's annual conference in London last week.

CVC is the latest in a series of major buyout firms to have sold stakes in themselves, crystallising a lucrative valuation for itself and securing funds for future expansion of its infrastructure and credit operations, two of the fastest-growing areas of its business.

The new investors gain a share of the profits made by the management company and get preferential access to investment opportunities.

GIC, one of the Singaporean government's principal investment funds, has also bought stakes in Apax Partners and TPG, two of the other giants of the private equity industry.

The decision by CVC to sell a stake in itself does not affect the direct ownership of any of the companies it controls, such as F1, Merlin Entertainments Group and Virgin Active, the health and fitness club operator.

CVC has been planning a flotation of F1 in Singapore although it was delayed earlier in the year because of the Eurozone crisis, and is not likely to be revived in the immediate future, according to people close to the firm.

While CVC is regarded as one of the shrewdest buyout groups, it has this year also had to abandon the listing of Evonik, a German chemicals company, and has been forced to write off its investment in Nine, a major Australian broadcaster.

In last week’s presentation to CVC’s limited partners, a copy of which has been leaked to Sky News, the firm provided a bullish outlook for its future investment activities.

Private equity firms have emerged to become the most prominent players in global finance during the last 20 years, taking control of some of the world’s biggest companies, and attracting scrutiny of their business models, which have frequently involved cutting costs and jobs in order to improve profitability.

News of the sovereign funds’ investment in CVC comes ahead of this weekend’s F1 race in the Asian city-state.

CVC declined to comment on its new investors.