CVC, other private equity firms taking hits in Asia

By Michael Flaherty

HONG KONG (Reuters) - It's been a tough stretch for the Asian portfolio of CVC Capital Partners, a large private equity firm that is taking hits from all parts of the region.

The firm recently failed to dispose of Amtek Engineering, the Singapore metal stamping company it bought last year, and is trying to sell Japanese shoe repair company Minit Asia Pacific in an acquisition climate getting worse by the day .

London-based CVC also has several Asian portfolio companies under pressure and a $4 billion fund to spend in a region where deals are getting smaller and scarcer as global financial turmoil deepens.

But CVC is not alone, with Asia portfolios of other major Western private equity firms being hit as well and tough markets making it hard for them to take profits on earlier investments.

TPG Capital TPG.UL, which also raised a $4 billion Asian fund, has invested in several finance-related companies that are hurting from the economic slowdown, while shares of Ta Chong Bank (2847.TW), a Taiwan bank backed by the Carlyle Group CYL.UL, are down around 50 percent this year.

Private equity firms rushed to Asia in the last few years to cash in on the region's booming economy, only to find a tougher than expected deal climate. The economic slowdown across Asia and recent market volatility has made the going even worse.

For CVC, the latest disappointment is the failure to sell Amtek, which it bought along with Standard Chartered's (STAN.L) private equity unit for S$552 million last year. Reuters reported in August that CVC and StanChart were preparing to sell the company, which had shown a big increase in cash flows.

The two firms thought they had private equity buyers lined up, but bank financing tightened quickly. Talks with potential suitors have broken off, sources confirmed this week.