Investors queue up for CVC's €1.25bn-plus IPOInvestors are typically cautious when it comes to IPOs of sponsor-backed companies, but when a private equity firm itself comes to market, it's a different story, as shown when CVC Capital Partners pushed the button on Monday on its long-awaited Euronext Amsterdam IPO. Proceeds will total at least €1.25bn for an expected market capitalisation of around €15bn and a free-float of at least 10%, with several bankers saying all those numbers could end up being higher. The deal has spent so long in preparation that investors need to act quickly if they are interested, and may already be too late considering the shadow book in place. Primary proceeds are slated at €250m, with at least €1bn to come in secondary shares from former partners, Singapore's GIC, the Kuwait Investment Authority and Stratosphere Finance, part of the Hong Kong Monetary Authority. CVC will use the cash for growth, including acquisitions and potentially funding a portion of the cash requirement for the purchase of Dutch infrastructure investor DIF that CVC bought in September for a reported €1bn. Approximately 74% of CVC is owned by management, with GIC, KIA and Stratosphere having acquired an 18% stake in 2012. Blue Owl, formerly Dyal Capital, acquired an 8% stake in November 2021 and is increasing its investment by buying up to 10% of the IPO. Active employees of CVC are not selling in the IPO and while former employees will sell, they will be subject to staggered lock-ups over three to five years. Other selling shareholders and the company will be locked up for 180 days. The sellers will also provide a greenshoe, expected to be 15%. Queuing up Not only has CVC been flagged as a large, liquid and well-known asset, but extensive marketing was done in late 2023 in preparation for launch before CVC pulled back to wait for better market conditions. Monday's launch, delayed slightly to assess the market reaction to heightened tensions in the Middle East over the weekend, came with significant indications of interest. A banker involved said his firm has carried out a record number of pilot-fishing meetings for CVC, while another said select investors have been able to attend multiple meetings with management. Blue Owl is likely to be the only cornerstone on the deal as more simply aren't needed. “We already have a who’s who of institutional investors wanting to take part so we really don’t need a cornerstone tranche, and it would be difficult to select one or two,” said a banker at one of the global coordinators. CVC, and Galderma before it, illustrates how large European floats are effectively being conducted privately before launch to ensure success. This was demonstrated by the €2.61bn IPO of Spanish beauty company Puig, which was multiple times covered at the maximum valuation within minutes of books opening on Friday. With CVC having spent so much time privately talking to investors, the public process will be brisk, with around a week each for pre-marketing and bookbuilding – and pricing before the end of April. EQT and Blackstone are cited as key peers, but also Partners Group, KKR and Bridgepoint, among others. Investors may also have an eye on CVC's track record in ECM with its portfolio companies. At a valuation of €15bn, CVC has an estimated 2025 P/E multiple on consensus of 14 times, close to a 35% discount to EQT, which is trading at around 21 times for 2025, with Blackstone just over 20 times and Partners around 24 times. “People are asking for a sensible discount, as was the case with Galderma, and that had a phenomenal aftermarket,” said the banker at the global coordinator. "Considering how EQT is performing, it's no surprise they're going ahead," said the second banker. Shares in Stockholm-listed EQT were up 13% since the start of the year when CVC launched its deal, having been up more than 20% in March, but have since shed more than 10%. Bankers don't see any great benef
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