CVC Looks To Cement Deal With Sovereign Funds

The private equity firm CVC Capital Partners is joining forces with some of the world's biggest sovereign wealth funds to bid for £4bn of cement assets that would make it a major player in the building materials sector.

Sky News has learnt that CVC (Taiwan OTC: 4744.TWO - news) is in discussions with Singapore's Government Investment Corporation (GIC) about a combined offer for a package of businesses being sold by Holcim (Other OTC: HCMLF - news) and Lafarge (Paris: FR0000120537 - news) , the Swiss and French cement giants, as they look to seal a £32bn merger.

CVC, which is best-known for its controlling stake in Formula One motor racing, is also understood to be talking to other state investment funds about teaming up on the proposed deal.

Two years ago, CVC sold a 10% stake in its own management company to three sovereign wealth funds, including GIC and the Kuwait Investment Authority.

GIC is also a significant investor - or limited partner - in CVC's buyout funds, which it deploys to acquire companies around the world.

The Singaporean vehicle does not disclose the scale of its assets under management but it has emerged as one of the largest state funds of its kind during the last decade.

The disposals being planned by Holcim and Lafarge include Britain's biggest cement-maker, Lafarge Tarmac, which the French group announced last month it would take full control of in order to make a full sale of the business easier.

Lafarge said it would pay at least £885m to Anglo American (LSE: AAL.L - news) , the mining group, for its 50% stake in the Tarmac division, which is also likely to attract interest from other industry players.

Holcim and Lafarge will also sell assets in markets such as Austria, France, Germany and Hungary in order to smooth the regulatory passage of their deal, which is one of the biggest mergers in any industry to be announced so far this year.

At least two other private equity consortia have been formed to bid for the cement operations which are being spun out of the combined group: Blackstone (NYSE: BX - news) has teamed up with Cinven and the Canada Pension Plan Investment Board, while BC Partners and Advent International are also preparing a joint bid.

Initial offers are understood to be due next month.

CVC declined to comment.