European PE giants CVC Capital is setting its sights on the Asia-Pacific market.
On February 21, CVC Capital announced in a high-profile manner that its sixth phase of Asia-Pacific** has completed its fundraising, with a fundraising scale of US$6.8 billion (equivalent to RMB 49 billion).
Judging from the results, CVC Capital's fundraising has received an enthusiastic response from the market. This issue** is not only a 50% increase over the fifth Asia-Pacific (US$4.5 billion), but also far exceeds the original target of US$6 billion, and even breaches the hard ceiling.
With the completion of this fundraising, CVC Asia Pacific** has become one of the largest private equity investments** in the Asia-Pacific region, with a total fundraising of more than US$21 billion.
In recent years, the global primary market has generally faced fundraising problems, and CVC Capital always seems to be able to break through the obstacles, and its ** has been frequently over-raised. This may be related to its capital operation model. Unlike most asset management institutions, CVC Capital only does mergers and acquisitions**, focusing on equity investment, and it is a good time for them to make a move at the trough of the economic cycle.
CVC Capital is actively preparing "ammunition" at the moment, which may also mean that more mergers and acquisitions are about to happen in the Asia-Pacific market.
In recent years, CVC Capital has continued to deepen its presence in the Asia-Pacific region and has strengthened its investment capabilities across the region. CVC Capital even makes no secret of the fact that CVC Asia Pacific** is one of the growth engines of its private equity platform.
It is understood that CVC Capital's Asia-Pacific private equity strategy is to focus on the holding and co-investment of high-quality enterprises in Asia's core consumer and service sectors, and has completed more than 80 investments in Asia so far.
Among them, CVC Asia Pacific Phase 6** will focus on holding, co-holding and co-investing in high-quality companies in Asia's core consumer and service sectors.
According to the data, as early as August 2022, CVC Capital began to prepare for the sixth phase of the Asia-Pacific ** fundraising. This is just two years after the completion of the fifth phase of Asia Pacific**, and the fundraising target is higher, which also reflects the enhancement of CVC Capital's investment capabilities in Asia.
According to regulatory information disclosed by the U.S. Securities and Exchange Commission, in less than a year since the preparation, the sixth phase of CVC Asia Pacific** has raised 44500 million US dollars (about 32 billion yuan), which has reached the same scale as the fifth Asia-Pacific region**, and has attracted new investors such as Canadian Pension** (CPPIB) and Oregon Civil Service Retirement** (OPERF).
In the end, after only 18 hours, CVC Capital raised $6.8 billion.
In fact, CVC Capital's investment in the Asia-Pacific market has slowed down for a while. There was a gap of six years between its fourth and fifth Asia-Pacific**. Its fourth tranche of Asia Pacific** was raised in 2014 with a size of US$3.5 billion.
Now that CVC capital is making a comeback, or more of a sign, the time for large-scale mergers and acquisitions is coming soon.
Bain Capital recently pointed out in its sixth annual "Global M&A Market Report" that in 2023, the overall deal size of the global M&A market will be reduced to 15% and 3$2 trillion, the lowest point in a decade. But M&A deals will increase in 2024 as the backlog of assets begins to enter the market.
Eric Tokat, co-president of Centerview Partners, a top investment bank, sees 2024 as a strong year for mergers and acquisitions. "I'm not sure if we're going to get 23 or 25 deals, but I think it's going to be a good year. ”
As early as 2023, many investment institutions have smelled changes in the market. The analysis points out that the underlying logic of the primary market has changed, the money-making effect of IPO exit is declining, and mergers and acquisitions are becoming the focus of the current investment market.
Goldman Sachs head D**id Solomon also mentioned in an earnings conference in mid-2023 that the global M&A industry is emerging a new sprout, and every major reset of the industry takes 5 or 6 quarters to complete. "Now in the sixth quarter, there is definitely a pick-up in private equity market activity and more mergers and acquisitions. ”
In July 2023, the ninth phase of M&A** issued by CVC Capital successfully raised more than 26 billion euros, equivalent to RMB 207.7 billion, breaking Blackstone's previous record of 26 billion U.S. dollars in M&A**. This further confirms the market's conjecture.
The Asia-Pacific market could be the next wave of mergers and acquisitions. KKR Co-CEO Henry Kr**is acknowledged that Asia is becoming a trading hub as more and more events take place in the region, and this trend is accelerating, "We are also seeing more and more countries participating and benefiting from Asia as a global growth engine." ”
In the Asia-Pacific market, China is undoubtedly one of the most popular destinations for investment. Although the maturity of China's M&A market and the acceptance of mergers and acquisitions by entrepreneurs are far less than those of overseas developed countries, there is no doubt that China's M&A industry is still in a state of waiting to explode.
CVC is also waiting for an opportunity. After the successful fundraising of the fifth phase of Asia Pacific ** in 2020, CVC Capital invested 13HK$500 million acquisition of Hong Kong fashion group it49.35% equity.
In 2021, CVC Capital launched a strategic investment in Xi'an Yikang Pharmaceutical; In 2023, CVC Capital will increase its weight again and officially realize the comprehensive acquisition of Xi'an Yikang Pharmaceutical.
Looking at the Chinese investment market in recent years, CVC Capital seems to have performed much worse than other PE institutions, which has also made the domestic market more and more unfamiliar with it. However, once upon a time, CVC Capital was also one of the most active private equity firms in China.
After 10 years in Asia, CVC Capital officially established its Beijing office in 2008 to focus on investing in the Chinese market. According to the official website, CVC Capital's offices in China have been changed to Shanghai and Hong Kong, with a total of nearly 30 employees.
In the glorious period of the Chinese market, CVC Capital has successively invested in many well-known projects such as Da Niang Dumplings, Qide Education, Jintian Pharmaceutical, Wanquan Pharmaceutical, Qian, South Beauty, Zhuhai Zhongfu and so on.
To add more background here: CVC Capital has been exploring the Asia-Pacific investment market since 1999. After entering the Asian market, CVC Capital initially chose to invest in some developed countries and markets, and its initial issuance of the first and second tranches** focused on investing in Australia, Singapore, Hong Kong, South Korea, Japan and other places. It was not until the beginning of the third phase that CVC Capital officially began to invest in Chinese mainland, among which South Beauty, Da Niang Dumplings and Kai Tak Education were all invested in the third phase**.
CVC Capital also became famous in China for its investment in South Beauty and Da Niang Dumplings, but in the end they all broke up. To this day, CVC Capital and South Beauty are still engaged in a long litigation battle. After a lot of twists and turns, CVC seems to have hurt its vitality, and since then, there have been few investment cases announced in the Greater China market.
But it is clear that CVC Capital does not seem to want to miss out on China, a huge and promising investment market. With the completion of the sixth phase of the Asia-Pacific ** fundraising, the market expects that the PE giant's presence in China will be more intensive.
From the beginning, CVC Capital's investment direction in Chinese mainland has mainly focused on five major industries - large consumption, finance, TMT, medical and pharmaceutical and service industries. Based on CVC Capital's investment performance in China in recent years, it seems that the PE giant has not adjusted its investment strategy.
In fact, these areas also show good M&A prospects. In terms of biomedicine alone, the Grand View Research report shows that the global biotechnology industry market in 2022 is about 1$37 trillion and is expected to grow from 2023 to 2030 at a rate of 13With a CAGR growth of 96%, this provides ample opportunities for mergers and acquisitions and strategic collaborations in the industry.
This is not just an opportunity for CVC Capital.