* Veteran Colin Buffin to step down from Candover Partners
* Marek Gumienny to be chairman, John Arney managing partner
* In talks to cut size of planned 5 bln euro 2008 fund
* NAV down 12 percent to 902 pence, beats expecations
* Shares up 8.5 percent
(Adds chairman comment, analyst comment)
By Simon Meads
LONDON, Aug 21 (Reuters) - British private equity firm Candover Investments announced a management shake-up and a better-than-expected performance for its investment portfolio, boosting its shares on hopes it will fix its unwieldy structure.
The stock bounced 8.5 percent -- but is still worth only half its value at the start the year -- as analysts anticipated the company taking drastic measures to restructure the business and repair its damaged reputation.
Former driving force Colin Buffin, who has been with the firm since 1985, will step down once talks over the future of Candover's 2008 fund are concluded.
"Colin has been with (the firm), man and boy; I think he thought it was time to hand over to a younger generation, particularly as the climate has changed so much," said Candover Investments Chairman Gerry Grimstone.
Candover angered investors when it broke its pledges to put money in its 2008 fund, for which it had already raised 2 billion euros ($2.85 billion) from others, and is now negotiating about the future of the fund.
The group's net asset value (NAV), which is measured twice a year, was down 12 percent at 902 pence at end-June, Candover said, ahead of an estimated range of 850 to 890 pence per share from brokerage Oriel Securities.
By 1015 GMT, shares in Candover were up 8.5 percent at 436.83 pence, still far below its NAV. Oriel raised its full-year target for NAV to 870 pence from 830 pence.
COMPLEX STRUCTURE
At the same time as it said stability was returning to its portfolio companies, Candover said Marek Gumienny would become chairman of Candover Partners, the private equity subsidiary that makes all the firm's investments.
Candover's complicated structure -- with a listed parent that co-invests alongside an independent but wholly owned fund manager over which it has no say -- has drawn heavy criticism ever since its problems started.
John Arney becomes managing partner, responsible for strategic direction, Candover said.
One of the main tasks at hand for the new managers is to settle the dispute with investors -- or limited partners (LPs) -- over the 2008 fund. It has asked its LPs if they wanted to withdraw the money they had already put in.
The firm had made presentations to its investors over the last four to six weeks and expects to have feedback in early to mid-September, Gumienny said.
The firm said it hoped the talks would lead to the emergence of a smaller fund than the 5 billion euro buyout fund originally planned when fundraising started.
"We are focusing on the 2008 fund, but no doubt there will a 2011, 2015, 2035 funds going forward. The future is wide open," said Grimstone.
After the 2008 fund debacle highlighted the weakness in its structure, the firm has implemented a contractual relationship between the two entities for the first time, said Grimstone.
As part of a demarcation of the two businesses, Malcolm Fallen will become CEO of Candover Investments, while Matthew Harrison becomes finance director, replacing Tian Tan.
Oriel said it expected a separation of the two businesses to be the most likely outcome of the review. (Reporting by Simon Meads; Editing by Douwe Miedema/Will Waterman) ($1=.6054 Pound) ($1=.7028 Euro)