Exclusive: Permira hits €5bn hard-cap on new fund

The firm is now just finalising legals on P5, which could total €5.3bn with the GP commitment.

Permira, a UK-based buyout firm, has reached its €5 billion hard-cap on its new fund, Permira V, according to several sources familiar with the matter.

The firm has stopped fundraising and is currently in “execution mode”, finalising all the necessary paperwork ahead of a final close, the sources said. This process could take until April, one added.

It is understood Permira will put in a GP commitment of between €200 million and €300 million on top of the €5 billion, potentially taking the final fund size up to €5.3 billion.

Permira declined to comment on fundraising.

The closing of Permira V, which ended up being oversubcribed, will bring to an end a protracted process. The firm first came to market with P5 in September 2011, initially targeting €6 billion. However, fundraising got off to a slow start, partly because Permira IV had only just got back to par after a series of write-downs following the financial crisis, a source familiar with the fundraise told PEI at the time. This ultimately persuaded Permira to reduce the fund’s target to between €4 billion and €5 billion in early 2013.

However, performance improved markedly in 2012: valuations across the portfolio climbed 19 percent in 2012, while the firm generated about €3.4 billion in exit proceeds. The firm also made a strong start to 2013, with the fund up 10 percent in the first quarter, rising to about 1.34x cost, according to a letter sent to LPs. This allowed Permira to hold a €2.2 billion first close in April last year.

This progress has continued during 2013 and 2014. Following its exit from ProSiebensat last month, Permira had returned 60 percent of P4 to investors. “They have turned things around quite well,” one source told PEI, adding that Permira’s post-2009 deals have performed markedly better than earlier deals in the fund.

It is understood that P4 is currently valued at 1.5x, although the firm has previously indicated to LPs that it expects the vehicle to ultimately return at least 1.8x.

Permira has already done four deals from P5. This month it completed the €158 million acquisition of LegalZoom. In December, it acquired Canadian health and nutrition company Atrium Innovations for €754 million. In November, it agreed to acquire UK wealth manager and online investment broker Bestinvest from 3i Group, while in October, it bought R Griggs Group, the parent company of British footwear brand Dr. Martens, for £300 million.

LPs in Fund V include SVG Capital, the University of Michigan and the Canada Pension Plan Investment Board, according to PEI’s Research and Analytics division.