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Permira preparing for another mega European buy-out fund

UK-based buy-out firm Permira, formerly Schroders, is gearing up to launch a new multi-billion euro European buy-out fund in the next few weeks. Permira Europe III is expected to trump its E3.5bn predecessor with a target of more than E4bn.

The new fund will join a handful of others, like Doughty Hanson, Terra Firma and Charterhouse, in the market. Some of the major US private equity houses, like Warburg Pincus, are also raising fresh capital, some of which will be focused on the European market.

Permira's strong reputation was further enhanced at the end of last year when it announced a successful exit for its Homebase investment in difficult market conditions. Against an almost barren exit landscape, the firm's sale to a trade buyer appeared like an oasis.

The firm itself has yet to confirm its marketing plans but the launch was revealed in Schroder Ventures International Investment Trust's half-year results, themselves a major beneficiary of the Homebase exit.

A statement released by the listed fund of funds, an investor in Permira, said: ‘SVIIT expects to make a substantial commitment to Permira Europe III, which is being launched this month. The fund is expected to build on the success of its two predecessor funds, both of which have provided investors with top quartile returns to date.'

SVIIT's statement downplayed concerns that the European buy-out market, particularly the larger end, is currently oversupplied with capital. It said: ‘We believe the opportunity for European buy-outs/buy-ins to be particularly attractive over the next few years, in terms of both deal flow and pricing.'

SVIIT announced a 9.5 per cent increase in its net asset value in the six months to the end of December 2002. Its Chairman John McLachlan, said: ‘This is an impressive performance…Against a background of uncertain markets, value has continued to be realised from the underlying portfolio.'

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