Permira cuts fundraising target by a quarter

UK-headquartered Permira has scaled back the target for its new buyout fund by nearly 25 percent. The firm, which started marketing Fund V in September 2011, is understood to have told LPs that it now plans to raise between €4 billion and €5 billion for Fund V, down from its original target of €6.5 billion. 

Permira declined to comment on the story, which first appeared in the UK-based Financial Times.

Private Equity International previously reported that Permira was aiming for a €2 billion first close by the end of this month, having originally planned to hit the milestone by the end of January. This official schedule is understood not to have changed – although the FT report suggested an April close date was now more likely.

Permira’s fundraising efforts have been hindered since SVG, a London-listed investment trust, decided to diversify beyond its core relationship with the firm.  

The firm’s first close will roughly coincide with the end of the investment period of Permira IV, a €9.6 billion 2006-vintage, which is currently 90 percent deployed. The firm obtained a six-month extension on its investment period for the fund last summer, taking it up until the end of this month.

The vehicle’s performance has improved since it posted a 60 percent markdown (and reduced its size to €9.6 billion from €11.1 billion) in December 2008. Top-line revenues at its portfolio companies grew by an aggregate 12 percent in the 12 months to December, with valuations up 26 percent on the year, the firm told investors in February. 

Permira also realised €3.4 billion of proceeds in 2012, including the $5 billion sale of software company NDS in March, which generated a 2.3x return on the firm’s initial investment. It also sold its final stake in the Galaxy Entertainment Group in November. 

Remaining companies in the portfolio include fashion retailer Hugo Boss, industrial group BakerCorp, and agrochemical business Arysta LifeScience.

Fund’s IV portfolio is currently valued at 1.3x cost, according to a source with knowledge of the firm.