Donald Mackenzie (right) takes part in qualifying for the 2015 Formula 1 Austrian Grand Prix alongside fellow billionaire Bernie Ecclestone (left).
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In the latest IPO amid a boom in European IPOs, private equity firm CVC Capital Partners is scheduled to go public on Euronext Amsterdam on Friday. The company published its prospectus on Monday, which gave a price range of between $14 and $16 (13 to 15 euros) per share and valued the company at $14 billion to $16 billion. If the IPO hits the market midway through that range, the deal will also create two new billionaires, co-founders Donald Mackenzie and Rolly van Rappard.
Mackenzie's 6% stake will be worth $890 million after the IPO at that price. Mackenzie, who stepped down as co-chairman of the company on February 13 but still sits on the board as honorary co-chairman in a non-executive capacity, is also selling a stake in shares valued at $130 million (pre-tax) at halftime ). This amount could increase by an additional $20 million if the company exercises its over-allotment option. Because CVC is based in the British Crown Territory of Jersey, it is unlikely to have to pay capital gains tax on these sales. Combined with his alleged ownership of the 171-foot superyacht Grace, which is worth an estimated $23 million, according to VesselsValue, Forbes estimates Scottish-born Mackenzie, 67, is worth at least $1 billion.
However, Van Rappard, the 63-year-old managing partner and remaining co-chairman, is not selling any of his shares. Its 6.7% stake will be worth $1 billion at the midpoint. Like Mackenzie, he also owns a yacht, the 184-foot Blue II, worth an estimated $32 million, per VesselsValue. He owns 50% of the ship, with the other half held by CVC co-founder Steve Koltes through his Jersey-based family office Kaltroco. The yacht can also navigate sea ice in polar regions and features a sauna, steam room and Turkish bath.
The Dutch businessman born on the Caribbean island of Curaçao – full name Louis Rodolph Jules Ridder van Rappard – lives in London. His Luxembourg-based family office Steflot had a net book value of $224 million as of its last filing in December 2022, including investment firm Imker Capital. Overall, Forbes estimates that Van Rappard is worth at least $1.2 billion. CVC representatives declined to comment on the review.
Prior to the IPO, CVC will also distribute a $327 million (pre-tax) dividend to its shareholders – a distribution that would represent approximately $23 million each for Mackenzie and Rappard and $14 million for Koltes .
CVC was founded in 1981 as the European branch of Citicorp Venture Capital, the VC arm of Citigroup. In 1993, Mackenzie, von Rappard, Koltes and five other co-founders (all of whom have since left the company) acquired the company and founded it as CVC Capital Partners. In 1996, they raised their first $630 million fund and shifted their focus to private equity. CVC currently manages $198 billion in assets and has offices in 29 cities on six continents. The company is best known for investing in sports, starting with its $2 billion leveraged takeover of the Formula 1 racing series in 2006, which it listed on the stock exchange in 2016 for $8 billion (enterprise value). Liberty Media sold, leading up to its $2.1 billion deal with Spanish soccer league La Liga in 2021 for an 8.25% cut of TV rights over the next 50 years.
CVC's holdings include pet food retailer Petco, which it bought with a Canadian pension fund for $4.6 billion in 2015; online university platform Multiversity, which it bought from Italian billionaire Danilo Iervolino in 2021; Swiss luxury watch manufacturer Breitling; There are also other high-profile sports investments, including the Women's Tennis Association and the Indian Premier League cricket team Gujarat Titans.
“When we founded CVC in the early 1990s, our goal was to create a multigenerational company that would thrive long after the founders had passed away,” Mackenzie said in a statement announcing his retirement in February. “I think we succeeded. The company is in very good condition and in good hands.”
In 2023, CVC reported revenue of $1.2 billion, largely comprised of management fees of $976 million, and EBITDA (earnings before interest, taxes, depreciation and amortization) of $692 million. While that was up 3.5% from 2022, it is much smaller than asset management giants like BlackRock and Blackstone or even European rivals like Swedish private equity firm EQT – all of which have annual revenue of at least $6 billion .
“They are taking a multi-pronged approach. They provide personal loans and provide credit options for businesses where they don't necessarily want to borrow from banks. They also have pretty big infrastructure opportunities that they're working on,” says Dean Kim, head of equity research at brokerage William O'Neil.
Infrastructure is a growing asset class for private equity. BlackRock announced a $12.5 billion deal to acquire infrastructure-focused Global Infrastructure Partners in January. Last September, CVC bought a 60% stake in Dutch infrastructure investment firm DIF Capital Partners for an undisclosed amount.
CVC's IPO could be dampened by rising tensions in the Middle East and market pessimism about interest rate cuts in the U.S., which has pushed BlackRock and Blackstone share prices down 7% and 4%, respectively, in the past month. But in Europe, where the European Central Bank is expected to cut interest rates soon, there could be stronger growth for asset managers like CVC.
“European asset managers should do well in the long term because the ECB is on track to cut interest rates,” adds Kim. “And when that happens, asset raising becomes easier, there is more liquidity in the market. Money has to go somewhere where it can generate a return.”
CVC's largest shareholder is listed private equity firm Blue Owl Capital, which bought a 10 percent stake in several CVC subsidiaries for approximately $1.1 billion in November 2021. It currently holds an 8 percent stake, which will be worth $1.2 billion at the median price. The company, which has created two billionaires – Doug Ostrover and Michael Rees – since going public in 2021, will also buy additional shares in the IPO for about $170 million, giving it a 9.1% stake after the deal .
Although he's not as rich as Mackenzie and van Rappard, Koltes – the only other co-founder still holding a role at CVC – will also see a significant increase in his net worth. Its 4.2% post-IPO stake will be worth $620 million at the midpoint, plus about $30 million (pre-tax) from stock sales, which could grow to $34 million through the over-allotment . The 68-year-old American stepped down as co-chair of CVC in January 2022 and now serves as honorary co-chair alongside Mackenzie in a non-executive role. His family office Kaltroco has also invested in Mediterranean fast-casual restaurant chain Taim, automotive M&A advisory firm Dave Cantin Group and German VC firm 468 Capital.
“CVC has long since outgrown its dependence on an individual or a group of people. The company attracts, motivates and invigorates unmatched talent. “For everything I do well, there are dozens in the company who do better,” Koltes said in a statement when he resigned in January 2022.
Two long-time CVC executives, Rob Lucas and Javier de Jaime Guijarro, will retain all of their shares in the company following the IPO. Their stakes will be worth $530 million and $520 million, respectively, at the midpoint.
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