Permira takes global view with latest fund

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Damon Buffini, chief of Permira, believes his private equity group should be judged on an equal footing to US rivals such as Blackstone, Kohlberg Kravis Roberts and Texas Pacific Group after raising more than €10bn ($12.8bn) for its latest buy-out fund.

The London-based group is seeking to differentiate itself from its European peers – notably Apax, BC Partners, Cinven and CVC Capital – by investing up to 30 per cent of its new fund outside Europe.

Permira has the capacity to invest up to €3.3bn of its fund in the US and Asia, compared with €765m in a previous fund that closed at €5.1bn in 2003. The new fund is expected to close at €11bn in September.

“We are now by far the largest European fund,” Mr Buffini told the FT. “We have created an infrastructure of more than 90 investment professionals in eight offices to invest large amounts of capital. We will focus on the large deal space that few firms can focus on.”

With the benefit of leverage as well as “co-investment” from its backers, Permira has the firepower to undertake deals of €4bn-€6bn without the need to partner with rivals. Its largest deal to date has been the €12.2bn buy-out of TDC, the Danish telecoms group acquired last year by a seven-member consortium.

Permira last year invested €2.2bn of equity. However, it returned €3bn to investors via portfolio company refinancings, flotations and sales to corporate and financial buyers.

The firm’s three European funds have completed 15 deals with an enterprise value of more than €1bn.

Mr Buffini rejected criticism about Permira’s US expansion. “We are not interested in purely US deals,” he said, adding he would target deals in the US with an international flavour. “There will be opportunities in Japan, too, when that market becomes a little bit more mature [for private equity].”

He added: “The last time we raised a fund people said returns were under pressure. They have not been and our last [€5.1bn] fund is performing very well.”

The three European funds raised since 1997 have generated an average annual return to investors, net of all fees and profit share flowing to Permira, of 33 per cent.

Permira last year hired Tom Lister, a former partner at Forstmann Little, as its US head.

Permira last year tried to buy Toys R Us and was part of a team that won the auction for Intelsat, a Bermuda-based satellite group.

With the exception of CVC, which has made inroads into Asia, and Apax, which has made some headway in the US, few of Europe’s large private equity firms have grown outside their local market – a strategy that contrasts markedly with the large US-based firms.

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