Candover yacht investment sinks

The buyout firm will walk away from Italian yacht manufacturer Ferretti, which under the current restructuring plan will remain in the control of the management team led by chief executive Norberto Ferretti.

UK-based buyout house Candover has entirely written off the value of its 50.2 percent equity stake in Ferretti, a beleaguered Italian yacht-maker.

Candover and fellow buyout firm Permira, which holds a 10 percent minority stake in the company, are not involved in the yacht-builder’s ongoing restructuring negotiations.

Ferretti: buyout houses no longer onboard

Under a proposed restructuring agreement, Ferretti chief executive Norberto Ferretti will lead a group of the company’s managers to inject fresh equity into the business alongside an unnamed financial backer. Subject to approval from the company’s lenders, new credit lines will be established and its debt burden will be reduced.

The two buyout houses “will not be part of the shareholding structure of the group going forward,” said the statement from Ferretti.

Candover acquired the majority stake in Ferretti from funds managed by Permira in October 2006 in a deal that reportedly valued the yacht-maker at €1.7 billion. Permira and the Ferretti management team reinvested the remaining 40 percent.

The share price of Candover Investments, the listed vehicle that owns Candover and invests in its funds, fell sharply on the news of the Ferretti write-off. It began the week trading at £4.03 (€4.51; $5.71) and has since dropped to £2.39. In September last year the shares were trading at around £22.80.

This is the second significant setback Candover has faced this month. Last week it revealed it will shrink the size of its 2008 fund and revise its investment strategy. Listed owner Candover Investments said its own commitment of €1 billion – a third of the committed capital – would be reduced “significantly”.

Candover Investments will announce its 2008 results on Monday.