CVC Capital Partners Is Undervalued On The Private Equity Boom

 

CVC Capital Partners PLC, the alternative assets management firm is undervalued on the current boom in private equity, private credit and infrastructure investments, according to Wolfteam Ltd.'s projections and estimates.

With 118 billion EURs of assets under management in private equity in  Europe and Asia, 14 billion EURs in secondaries, 43 billlion EURs in credit assets, and 18 billion EURs in infrastructure assets, 193 billion EURs of assets under management altogether according to its half year 2024 report, CVC is well poised to benefit from the current boom in private equity, private credit, infrastructure assets or private assets altogether.

According to its half year 2024 report CVC poste strong operating profit, net profit and revenue results:

Key financials
Statutory measures
– Total revenue increased to €638m (H1 2023:
€504m) primarily due to the inclusion of two
months of CVC Credit revenue, and an increase in
management fees following the activation of
Europe / Americas Fund IX and Asia VI.
– EBITDA decreased to €138m (H1 2023: €177m) due
to an increase in the valuation of the forward
liability of €151m, partially offset by the increase in
revenue. The forward liability represents the value
of the Group’s obligation to acquire the remaining
40% interest in Glendower Capital. The value of the
liability reflects the value of the shares issued to the
sellers of Glendower Capital. This value has
increased over the Jun-24 period in line with the
increase in the share price of CVC Capital Partners
plc. This obligation was settled by the issue of
shares of CVC Capital Partners plc on 10 May 2024
and 2 July 2024.
– Profit after income tax decreased to €80m
(H1 2023: €148m) due to the factors explained
previously, as well as an increase in depreciation
and amortisation on acquired intangible assets,
and an increase in finance expenses. Refer to
page 14 for further information.

Below is the state of comprehensive income report of CVC Capital Partners:

Financial Review (continued)
Statutory statement of profit or loss (€ 000) Jun-24 Jun-23
Management fees 443,739 365,713
Carried interest and performance fees 108,725 87,531
Investment income 83,274 49,295
Other operating income 2,491 1,033
Total revenue 638,229 503,572
Advisory fee expense – (210,744)
Personnel expenses (182,493) (27,568)
General and administrative expenses (106,757) (31,561)
Change in valuation of forward liability (209,420) (58,762)
Foreign exchange (losses)/gains (191) 2,169
Expenses with respect to investment vehicles (1,609) (137)
EBITDA 137,759 176,969
Depreciation and amortisation (33,580) (12,923)
Total operating profit 104,179 164,046
Finance income 4,400 5,971
Finance expense (22,495) (13,688)
Profit before income tax 86,084 156,329
Income tax charge (6,049) (8,545)
Profit after income tax 80,035 147,784
Attributable to:
Equity holders of the parent 44,794 136,330
Non-controlling interests 35,241 11,454

CVC Capital Partners PLC has raised the largest alternative assets management private equity fund globally at 26.8 billion EURs, which speaks to the fund raising strength of CVC Capital Partners PLC:

Fundraising
– Total AUM reached €193bn.
– FPAUM increased from €98.2bn as at 31 December
2023 to €142.4bn as at 30 June 2024, or +45%, mainly
driven by the activation of Europe / Americas Fund IX
and Asia VI, and the inclusion of Infrastructure1.
– €7.4bn of capital raised2 in H1 2024 across all
strategies, including initial closes for SOF VI and
Growth III.
– Six funds are currently in the market, and
fundraising is progressing according to plan.
– We launched our first semi-liquid vehicle
(CVC-CRED) in March (c.€0.3bn of aggregate
capital as at 30 June3) and we are working on our
first semi-liquid Private Equity vehicle.

CVC Capital partner's intrinsic value is 37 billion EURs, compared to CVC's current market capitalization of 24.60 billion EURs., according to Wolfteam Ltd.'s projections and estimates.