Shock for private equity world as Permira struggles to raise fund

David Hellier
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PERMIRA, one of Europe’s best known buyout groups, has been forced to extend the closing date for its fifth fund from the end of January to possibly as late as March, amid concerns that it is struggling to get to its target.

Investors had previously been told that the first closing date for the fund, at which point it is able to start making investments, was going to be towards the end of January. This deadline is now certain to be missed.

Sources close to the process said yesterday: “There are a lot of bilateral conversations going on but this is a difficult environment.”

It is not clear whether the group will formally write to investors now or whether it might wait until February to inform them of the extension. Permira is hoping to raise a total of €6.5bn (£5.6bn) for its fifth fund, well down on its earlier €9.6bn fund, in a reflection of the more difficult markets in which private equity groups are currently operating.

In the years since the financial crisis most groups have found raising money more difficult because of the uncertainties in world financial markets, especially the Eurozone, and a downturn in the new issue markets, traditionally the place for private equity to offload assets.

“Permira’s problems feel like a watershed moment for the industry,” said an industry source. “It has always been the flagship group for the industry.”

Sources close to Permira are confident that the fund will eventually raise the hoped for amount, albeit slightly later than expected. It is only targeting to raise around one-third of the total by the time of the first closing date.

Critics say the group has lost some of its lustre since a handful of larger personalities, such as Damon Buffini, Martin Clarke and Charles Sherwood, have either left or taken less hands-on roles. The current co-managing partners, Kurt Bjorklund and Tom Lister, though very capable, are less well-known than their predecessors.

Permira has had a couple of disastrous investments, Gala Coral and Hungary’s Borsodchem. But it points to a number of recent successes and a strong performance from its Permira IV fund.