REG - CVC Income & Growth CVC Inc& Grwth-CVCG - Company Update

CVC Income & GrowthAnnouncement

28/07/2025 07:00

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RNS Number : 6860S  CVC Income & Growth Limited  28 July 2025

28 July 2025

 

 

CVC Income & Growth Limited

(a closed-ended investment company incorporated in Jersey with registration
number 112635)

Registered Office: IFC1, The Esplanade, St Helier, Jersey JE1 4BP

 

Company Update

 

CVC Income & Growth Limited (the "Company") operates within a
"master-feeder" fund structure.  The Company is a "feeder" fund and its net
assets are invested into a "master" fund, being Compartment A of CVC European
Credit Opportunities S.àr.l., a European credit opportunities investment
vehicle (the "Investment Vehicle"), which is managed by CVC Credit Partners
Investment Management Limited ("CVC Credit Partners").

 

The following paragraphs articulate the details of the underlying transaction
that is expected to take place in the next few days which involves a change to
the Company's master fund.  The Company will continue to have substantially
the same investment policy, and access to underlying investments as before
with materially similar costs and charges in place with the potential for the
costs and charges to reduce as the master fund increases in size.

 

Background - proposed change to the master fund

 

CVC Credit Partners has proposed to make certain changes to the master-feeder
structure which it is believed will, over time, be beneficial for all
investors in the Investment Vehicle. In summary:

 

·    a new investment vehicle, CVC Credit Partners Performing Credit SCA
SICAV-RAIF - Compartment 1 - European Credit Opportunities Fund (the "New RAIF
Vehicle"), which is to be structured as a sub-fund of an umbrella partnership
limited by shares operating as a Reserved Alternative Investment Fund
incorporated under the laws of Luxembourg has been established by CVC Credit
Partners;

·    the New RAIF Vehicle will be an alternative investment fund or "AIF"
for the purposes of the Alternative Investment Fund Managers Directive and as
such, will require an alternative investment fund manager. CVC Europe Fund
Management S.à r.l. (the "AIFM") will perform this role, with CVC Credit
Partners as the delegated investment manager;

·   the New RAIF Vehicle is expected to have the same investment policy as
the Investment Vehicle in substance and to adopt the same investment limits
and restrictions (including percentage limits) as those of the existing
Investment Vehicle, ensuring alignment with the Company's investment policy;

·    as well as investing in the Investment Vehicle, the New RAIF Vehicle
may invest directly into assets in accordance with its investment policy.

 

CVC Credit Partners has offered the investors in the Investment Vehicle
either: (i) to remain invested in the Investment Vehicle; or (ii) to exchange
their interests in the Investment Vehicle for interests in the corresponding
share class of the New RAIF Vehicle (the "Proposal"). It is anticipated that
the Proposal will be implemented on 31 July 2025.

 

Costs and charges of the New RAIF Vehicle

 

·      There will be no change in the management fee rates as a result
of implementing the Proposal.

·      As is the case for the Investment Vehicle, the New RAIF Vehicle
will not pay a performance fee.

·     The AIFM will be entitled to an additional fee which is currently
structured as a tiered fee and is expected  to be less than 0.02 per cent of
the gross assets of the New RAIF vehicle (the "AIFM Fee"). The AIFM   Fee
may be increased by the AIFM but is capped at 0.1 per cent of the gross assets
of the New RAIF   vehicle.

·      CVC Credit Partners believes and has confirmed to the Company in
writing that:

o  the AIFM fee, together with any incidental additional annual operating
costs of the New RAIF Vehicle, will not materially exceed the operating costs
of the Investment Vehicle by an amount equal to 0.05 per cent of the
Investment Vehicle's NAV (and therefore, the Company's current ongoing charges
ratio); and

o  the set up costs for the New RAIF Vehicle which are chargeable to the
investors in the Investment Vehicle, including the Company, will not
materially exceed 0.05 per cent. of the Investment Vehicle's NAV as at the
date on which the Proposal was made and that such costs will be amortised over
a period of up to 5 years, subject to the applicable accounting rules.

 

Company's position and rationale

 

Following detailed discussions with CVC Credit Partners in connection with the
Proposal and review of the documentation published in relation to the Proposal
and the New RAIF Vehicle, the Company has agreed to exchange its interests in
the Investment Vehicle for interests in the New RAIF Vehicle and understands
from CVC Credit Partners that substantially all of the other investors in the
Investment Vehicle have elected to do so as well. Following such election and
the implementation of the Proposal, the New RAIF Vehicle will in effect become
the "master" fund in which the Company invests and the New RAIF Vehicle in
turn, will become initially the majority investor (and with an intention and
expectation to become the sole investor) in the Investment Vehicle.

 

By way of a reminder, the management fee rates are set out below:

 

·   0.90 per cent. per annum of the New RAIF Vehicle's net asset value, as
reduced for any balance attributable to CVC, ("Applicable NAV") up to €500m;

·      OR 0.85 per cent. per annum of Applicable NAV, if the Applicable
NAV is equal to or more than €500m and less than €750m;

·      OR 0.80 per cent. per annum of Applicable NAV, if the Applicable
NAV is equal to or more than €750m and less than €1bn;

·      OR 0.75 per cent. per annum of Applicable NAV, if the Applicable
NAV is equal to or more than €1bn.

 

The management fee rates above currently apply at the Investment Vehicle level
and will apply at the New RAIF Vehicle level once the Proposal is implemented.

 

CVC Credit Partners expects that the New RAIF Vehicle will be more attractive
to EU-based investors than the existing Investment Vehicle, thereby allowing
the New RAIF Vehicle to raise more investment from a wider base of investors
than the Investment Vehicle is currently capable of.  This should enable the
Company to benefit from the lower management fee tiers noted above which, all
other things being equal, is expected over time to reduce its ongoing charges
ratio notwithstanding the additional cost referred to above. The first such
management fee reduction would only require the New RAIF Vehicle to increase
the Applicable NAV by an additional €40m. Further, such reduction in ongoing
costs may lead to increased demand for the Company which may improve liquidity
in its shares.

 

Once the Proposal is implemented, the only change to the Company's investment
policy will be to refer to the New RAIF Vehicle as the 'master' fund instead
of the Investment Vehicle.

 

As investors in the "feeder" fund, the Proposal has no direct impact on the
Company's shareholders and they need take no action.

 

The Company expects to make a further announcement following completion of the
Proposal.

 

Enquiries:

 

CVC Income & Growth Limited:            +44 (0) 1534 815200

Robert Kirkby, Chairman

 

Winterflood Securities Limited               +44 (0) 20 3100 0000

Neil Morgan

 

BNP Paribas S.A., Jersey Branch         +44 (0) 1534 813800

Company Secretary

 

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