Report: CVC leaving Australia

CVC's struggle with the heavy debt of portfolio company Nine Entertainment has prompted the firm to leave Australia, according to reports.

CVC is closing down its Australia operation due to big losses in the region and dwindling bank support, according to a Reuters report citing an unnamed source. CVC could not be reached for comment by press time.

The London-based firm has been struggling with its debt-ridden portfolio company, Nine Entertainment, and has been fending off creditors including Apollo Global Management and Oaktree Capital. 

CVC could potentially lose more than $2 billion, according to the report. The firm recently failed to refinance A$2.6 billion (€ 2.1 billion; $2.7 billion) of Nine’s debt, which reaches maturity in February 2013.

Bryan Zekulich, Oceania managing partner for private equity at Ernst & Young in Sydney, told sister publication PE Asia that CVC’s Australia team is clearly downsizing, but added the firm had been selling off its Australia investments in line with the portfolio lifecycle.

The firm’s troubles are not an indicator of wider turmoil in Australia’s private equity industry, he said. 

“Australia’s private equity space has seen more challenges because the number of opportunities has been lower this year. There is still a positive secondary market with cashed-up corporate buyers that could absorb private equity exits.”

As an example, he cited Quadrant Private Equity’s recently announced sale of its in-vitro fertilisation business Virtus Health Group, which has generated interest from both corporate and private equity buyers.

Buyers still pay attention to private equity portfolio companies in Australia, particularly those involved in mining services and waste businesses, he noted.