CVC Capital Partners

CVC Capital Partners is a $4billion 'buy out' company registered in the Cayman Islands. Its British investments are managed by CVC London.

CVC is described as:

'a trailblazer in the secret side of a City dominated by privately owned hedge funds and buyout firms shielding their methods from public scrutiny'. CVC's Chief Executive 'Smith said: "We are not in any way seeking to be secretive ... We aim to achieve the best returns we can for our investors, which is our job." Buyout firms say their minimal disclosure is necessary to get things done. But critics say they are now so powerful, the public needs to know more about who owns them and how they work. In Britain, buyout firms control companies that employ 18% of the private- sector workforce'.

CVC denies that it is secretive. It says it's private. However one describes it, CVC's key sales and profit figures are not generally available and its executives use offshore jurisidictions to maximise secrecy and minimise tax. Its legal structure is described as 'byzantine' with information that is available on the company being 'sketchy'.

In 1996 CVC raised $840m from investors (such as the New York State and California public workers' pension funds) to buy and turn around European companies. In 1998 it had a pool of $3.3billion. CVC branched out into Asian buyouts in 1999, Citi, Metlife and Prudential were the partners as it began operations in Tokyo (Maarten Ruijs was in charge of running it).

According to The Sunday Times, 'CVC's success stems from its record in acquiring and re-selling companies. Its portfolio includes, or has included, the department-store group Debenhams, the car-parts retailer Halfords, the Scottish & Newcastle pub estate, the tyre and exhaust retailer Kwik-Fit and the financial group IG Index, in addition to the AA. CVC has also been active on the Continent. It owns 20% of Denmark's postal operator Post Danmark. CVC and Post Danmark were recently chosen by the Belgian government to buy 49.9% of Belgian Post. CVC says that it has been the most acquisitive buyout firm in Europe this year'..

CVC is reported to have done 220 deals with a transaction value of $60 billion. It is Europe's largest buyout firm with 12 offices and 53 investment professionals and an ownship of 38 companies in the region. CVC's profile in the European buyout business is described as that of a 'hardball player'. 'Its rivals say that the company's internal culture is equally hardball. "At CVC, you eat what you kill," said a banker who knows the group'.

Buyout firms claim that they are promoting an 'entrepreneurial spirit'. However critics say 'they are loading dangerous amounts of debt on companies and cutting jobs'.

The Sunday Times also reports that:

'A former director reported that CVC, its partner Permira, and consultants McKinsey and LEK were "mer-curial". "They told us we had nothing to fear because they wanted continuity. Then, when the deal was done, unless you pledged total loyalty, you were out," he said'.

It is estimated that CVC could be worth 5% of the $16 billion in funds it has under management. This equates to a value of $800m for its business. Smith's stake would then be in the region of about £90m, senior partner Mackenzie's 10% stake would be worth £45m and Lucas a Feuer could be looking at £9m each for their 2% stakes.

The Owners of CVC

As reported in 2005...

* Futureline Holding 16% 100% owned by Michael Smith, CVC chairman
* Steflot Holding 11% 100% owned by Rolly van Rappard, head of CVC Northern Europe
* Donald Mackenzie, CVC partner, London 10%
* Purval Investments 7% BVI-registered, owners unknown
* Bruce Hardy McLain, CVC partner, London 7%
* Francisco Javier de Jaime, CVC partner, Madrid 6%
* Cassiopeia Holding 6% 100% owned by Maarten Ruijs, head of CVC Asia Pacific
* Mourant & Co Trustees 6% CVC's Jersey-based administrator
* Corinne Koltes-Sulzer 5% relation of Steven Koltes CVC managing partner, Frankfurt
* Newlight Ltd 5% Jersey-registered, owners unknown
* Stefan Oostvogels, director of CVC Europe 4%
* Robert Lucas, CVC partner, London 2%
* Marc Boughton, CVC partner, London 2%
* Jonathan Feuer CVC partner, London 2%
* Philippe Gleize, CVC partner, Paris 2%
* Luigi Lanari, CVC partner, Milan 2%
* Daniel Schmitz, CVC managing partner, Frankfurt 2%
* Nicholas Archer, CVC partner, London 1%
* Mark Grizzelle, CVC partner, London 1%

Asset stripping the AA

Automobile Association The Evening Standard (London) report that:

'CVC Capital Partners and Permira bought the AA for Pounds 1.75 billion from British Gas group Centrica in July 2004. Under chairman Sir Trevor Chinn and chief executive Tim Parker for the last three years, the AA has grown its business. But it recently attracted the anger of the GMB trade union after it announced cost-cutting measures that will see it sack 3500 people - almost a third of its staff. It accused CVC and Permira of asset-stripping after reports they intended to gear up the AA with an extra Pounds 500 million of debt and pay themselves a sub-stantial special dividend. Neither Permira nor CVC would comment...'

'Substantial profits' from Kwik Fit

CVC took over Kwik Fit in 2002, when it was bought from Ford. In 2005, They sold it on to PAI Partners and in doing so made 'a substantial profit on the deal'. It was reported that the 'sale will bring a windfall of tens of millions of pounds to the management team employed by CVC'. Kwik Fit Chairman Trevor Chinn is reported to have been 'drafted in by CVC after it bought the business'.

CVC's investments

In 2004, CVC is reported to have quadrupled its £137m investment in Halfords

CVC is also reported to have lost in its bid for the Telegraph Group in 2004.

Brand building

In a 2004 report, CVC along with Permira are described as having 'extensive track records for developing well-known brands including Debenhams, Halfords, Homebase and William Hill'.

Lobbyists

• Westminster Advisers 2015