OVER Investments will spin off its private equity management arm to a group of its directors as part of its wider plan to wind down the firm.
It will offload Candover Partners Limited (CPL) to new entity Arle Capital Partners, an investment advisory firm set up by the group of its executives, for a nominal sum and sell 29 per cent of its investment portfolio to an entity backed by Arle and private equity group Pantheon.
The value of the sale is expected to come in at around £60m – a heavy discount to the carrying value of the assets. The funds will be returned to its investors as the firm seeks to claw back losses incurred during the financial crisis.
Candover also announced long-standing chairman Gerry Grimstone plans to step down after the sale closes, adding “the search for a successor has begun”.
Malcolm Fallen, Candover’s chief executive, said: “This is the last significant step in implementing our plans to return cash to shareholders over time.
“The sale of CPL to its executives will create an independent, motivated and incentivised manager focused on maximising and realising the value in the portfolio.”
Candover’s move to sell its portfolio of companies and return cash to investors follows a failed attempt to sell the business in August.
The firm was undone by a series of ill-judged acquisitions at the height of the boom. But when the market went sour, Candover saw the net value of its assets fall by half and was forced to allow investors a chance to cancel outstanding commitments to the fund.
The Candover Partners sale comes after an announcement in September that it had agreed the sale of its Equity Trust unit to private equity rival Doughty Hanson, in a deal valuing the business at £297m.
It also said in October a deal to sell its Ontex nappy-making business to US buyout firm TPG and the private equity unit of Goldman Sachs had gained EU regulatory approval.
The sale of the remainder of Candover’s assets could still take years to complete, with the firm insisting there will be no fire-sale.
CHARISMATIC chairman Gerry Grimstone will soon sever his relationship with Candover that has lasted over a decade.
The 60-year-old announced yesterday he will step down when the sale of Candover Partners Limited to a group of its executives closes next year. His time at the firm has been tumultuous – for many years Candover was a roaring success story, wielding a Midas touch that was the envy of the private equity industry.
But Grimstone experienced the flip side of the coin when the financial crisis hit and the value of its portfolio plummeted. He received criticism for a number of acquisitions at the firm that were deemed ill-judged.
Grimstone, though, is no stranger to criticism. He came under fire from the left for his role in the privatisation drive of the early 1980s.
As assistant secretary at the Treasury from 1982 to 1986, he was a key adviser to Margaret Thatcher during her landmark £5.4bn asset sales. He oversaw 20 major sell-offs including offloading the water companies and privatising BT. While the sales were lauded in the City, it was famously described as “selling off the family silver” by Harold Macmillan.
He later went on to advise the Labour government as it attempted to claw back funds during the financial crisis by selling off state assets.
While he made his name as a civil servant, he made his fortune as an investment banker. He joined Schroders in 1986, where he rose to vice chairman of worldwide investment banking, splitting his time between London, Hong Kong and New York.
He maintains an interest in the civil service, holding the position of chairman of the Nominations Committee and member of the Remuneration Committee. He was overlooked for the chairmanship of the court of directors at the Bank of England.
The physically imposing Grimstone has a reputation for being both intelligent and combative.
The divorcee with three children has also been a member of the Standard Life board since 2003.