(Bloomberg) -- CVC Capital Partners Plc has room to pursue selective acquisitions as it looks to expand its offerings as a multistrategy private equity firm, according to Chief Executive Officer Rob Lucas.
In its first-half earnings report on Thursday, CVC said it sees “significant opportunity” to scale existing strategies, citing growth potential in secondaries, credit and infrastructure in particular. It isn’t ruling out expanding via acquisitions in other areas as well.
“Will we have our eyes open for other inorganic developments in other areas? Yes, we do,” Lucas said on a call with reporters. “We do have eyes open, but we will be very selective.”
CVC would be open to opportunities that present the “right size, right cultural fit and the ability to really scale” across the firm’s network, he said, adding it isn’t in any rush.
The private equity firm has grown via acquisitions in recent years, buying Glendower Capital in 2021 to gain a foothold in the fast-growing market for secondaries. Last year it took a majority stake in DIF Capital Partners to expand its infrastructure offering.
This is CVC’s first set of financial results since it started trading in Amsterdam in April, after a long-awaited initial public offering that saw it raise €2 billion ($2.2 billion) alongside its investors. The shares have climbed more than 30% since the listing, making CVC one of the most successful stocks to debut in Europe this year. It has also outperformed peers such as Sweden’s EQT AB and London-listed Bridgepoint Group Plc on the stock market.
Shares of CVC rose as much as 4.8% and touched an all-time high following its earnings report on Thursday.
Higher interest rates and sluggish markets for new listings and M&A, combined with a tougher fundraising environment, have vastly complicated the private equity business of buying and selling firms. CVC has so far managed to hold onto its pole position.
It raised €26 billion last year for the world’s biggest-ever buyout fund — a sharp contrast to peers that had to delay fundraisings or adjust expectations. It added to its cash pile by raising €7.4 billion in capital in the first six months of this year.
Second-Half Outlook
CVC has been busy putting that cash to work after a ramp-up in dealmaking. It deployed €13.4 billion in the January-June period, 63% more than the corresponding period last year.
The firm agreed last week to take a stake in Swedish property manager Odevo AB. That came weeks after a deal with a group of other investors to buy Hargreaves Lansdown Plc, which valued the UK investment platform at £5.4 billion ($7.1 billion).
It generated €9.4 billion from exiting investments in the first half, more than double the tally at this time last year. CVC listed German perfume retailer Douglas AG among one of its key exits this year.
However, the firm isn’t anticipating the same level of realizations in the second half as it had in the in the first half, Lucas said.
“We continue to actively look to realize, but equally know the timing of those can be can be quite uncertain,” he said, noting that realizations can be “lumpy.”
CVC’s total revenue grew 27% year-on-year to about €638 million in the first half of the year, while fee-paying assets under management increased by 45% to €142 billion from €98 billion at the end of 2023.
Besides a mixed environment for M&A, private equity firms in the UK are also contending with a potential end of a key tax break. The new Labour government is considering changes that would see carried interest — fund managers’ portion of profits on asset sales — taxed as as income rather than capital gains.
CVC isn’t concerned because of the international nature of its private equity business, according to Lucas.
“Will it influence where some people want to be based? Probably, actually. Is that a worry for us? No, it’s not,” he said.
(Updates CVC’s share moves in seventh paragraph.)
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