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Private equity house Candover announced further management changes today — as it slashes its workforce.
The listed Candover Investments has made Malcolm Fallen, former chief executive of telecoms group Kcom, its new chief executive.
This follows the recent promotion of John Arney, formerly of 3i and JPMorgan, to managing partner in charge of all investments.
Colin Buffin, the original driving force behind the firm, is meanwhile to step down.
As a result of its restructuring, Candover will have a staff of 41 by the end of next month — down from 102 at the start of this year.
Cuts have been made in senior management, while fledgling operations in the Far East and eastern Europe have been closed.
“That is a dramatic indicator of what the private-equity world has been through recently, and where it is now,” said chairman Gerry Grimstone — who has been battling for 12 months to restore the firm's reputation and financial stability.
“In the last six months we have made significant progress in achieving financial stability, partly by realising some investments, and by cutting our cost base.”
The fund's net-asset value fell 12% to 902p a share in the six months to June. But if one-off redundancy costs and the effects of the falling pound against the euro and dollar are ignored, assets rose 8%.
Grimstone said now is not the time for Candover to cut and run from its investments. “Traditionally private-equity firms make the most in the years immediately after a recession. But in the meantime they have to nurse portfolio companies through the challenging economic climate.
“They have to ensure they have the resources and expertise to trade through the downturn, and take advantage of opportunities when they come out the other side.”
Within the next few weeks Grimstone expects to have resolved two outstanding headaches at Candover. The first is the 2008 fund, where Candover Investments withdrew its funding commitments leaving the fund suspended in April.
Attention is also focussed on Candover Partners, an investment management company 100% owned by Candover Investments, but which also acts for hundreds of other funds which invest alongside Candover. Grimstone said the financial crisis had exposed a potential conflict of interest between his shareholders, and other investors in Candover funds. The obvious solution would be to separate Partners, probably through a management buyout.
This would allow outside investors to resume investment in Candover 2008, and leave the listed Candover Investments to return to private-equity investing at some future date.
But Grimstone said there is no deadline to address either issue: “We are the first of the major private-equity businesses to have restructured and put management succession in place,” he said.
