Permira merges teams in push for more services deals – exclusive

The firm has merged its financial services and industrial tech and services teams to tap more attractive deals as a result of market dislocation.

Permira has combined its financial services and industrial tech and services teams to better access opportunities presented by market conditions.

In line with this move, the London-headquartered buyout firm wants to deploy €1 billion a year into services-related companies, which will include financial services, business services and professional services, Philip Muelder, a partner at the firm and the global head of the unit, told Private Equity International.

Permira invests in four key sectors – consumer, services, healthcare and technology – and has close to €13 billion of capital to deploy. It gathered €11 billion last year for its flagship buyout vehicle, Permira VII.

There will be no reduction in staff and the combined unit will comprise 25 employees in London, Frankfurt, New York and Hong Kong. Muelder, Robin Bell-Jones and Jens Riedl, who are all partners at the firm, will lead the effort.

The covid-19 dislocation creates an attractive investing environment for the services sector, Muelder told PEI. Permira has 13 portfolio companies in services and they are proving resilient during the crisis as they are recurring revenue businesses that have adjusted to the changed environment, he added.

“This is a great time to invest into the sector platform and that’s why we are putting such a focus on services, including building out our senior industry network and specialist skills,” Muelder said.

Asked about how the pandemic is affecting dealmaking, Muelder said investment activity will resume with particular opportunities for buying listed companies given their needs for liquidity amid depressed valuation levels.

“We have a good dozen targets in mind where the dislocation might create an opportunity,” he said. “Creating this larger and more focused sector effort in services will be better able to capitalise on it.”

Permira began thinking about merging the two units prior to the coronavirus crisis as they had been collaborating on services as an attractive area, Muelder noted.

The firm’s recent investments in the services sector include Axiom, an on-demand legal talent provider, and Topcast, a Hong Kong-based aircraft parts distributor. Last year, it sold valuation and advisory services firm Duff & Phelps to Stone Point Capital and a group of investors for $4.2 billion after a little more than two years of ownership, generating almost 3x for Permira, according to a report from Dow Jones. It bought the company for $1.75 billion in November 2017 and has kept a minority stake in the business following the transaction last year.

Capital for deployment will come from the 2019-vintage, €11 billion Permira VII and the 2018-vintage, $1.7 billion Permira Growth Opportunities Fund I. Permira is not raising a dedicated vehicle for the combined services strategy, Muelder said.