Permira Plans to Raise $9.3B Fund

Private equity firm Permira will start raising a new 6.5 billion euros ($9.3 billion) fund in September, Reuters reported Monday. The target is 40% smaller than the $11.1 billion fund the firm raised in 2006. The firm said it will focus on investments in the 500 million euro to 3 billion euro range, Reuters said.

(Reuters) – Private equity firm Permira will start raising a new 6.5 billion euros ($9.3 billion) fund in September, well below the pool of capital it raised during the buyout boom, a person familiar with the matter said.

Permira [PERM.UL] unveiled the plans last week at its annual investor meeting, the source said.

The buyout firm, whose investments include fashion house Valentino Hugo Boss and Danish telecoms group TDC (TDC.CO), faces stiff competition as a wave of rivals go back to the market for fresh capital, finding many investors pickier about the firms they back.

Permira’s plan envisages a fund 40 percent smaller than the 11.1 billion raised in 2006. The size of the fund, its fourth, was later scaled back to some 9.6 billion euros.

One of the reasons Permira may be scaling back is that cornerstone investor SVG Capital (SVI.L) — which retained a 22.2 percent stake in the fourth fund after the reorganisation — would have less money to invest than in the previous fundraising cycle, said Oriel Securities analyst Iain Scouller.

“We think that SVG will only be able to make a relatively small investment, if any investment at all,” Scouller said in a note.

Permira told investors it would concentrate on investments in the 500 million to 3 billion euro enterprise value range, the person said.

That would match the deals made out of the second half of its fourth fund, including pump and filtration equipment rental firm BakerCorp, acquired for $960 million.

Many of the buyout industry’s biggest names are either raising capital or planning to start raising new funds by 2012.

BC Partners [BCPRT.UL] has already held a first close on its ninth fund — the point after which capital can be deployed and investors are locked in — while Cinven [CINV.UL] and Apax are currently raising funds, people familiar with those processes have said.

Guy Hands’s buyout house Terra Firma [TERA.UL] is expected to start officially marketing its latest fund early in 2012, a person familiar with that matter said last week.

Hands recently told investors he expects Terra Firma’s next fund to be 2 billion to 3 billion euros in size, echoing views that many funds will need to shrink in size to match the environment with fewer and smaller deals.

Permira still has 1.5 billion euros left to invest in its fourth fund and until September 2012 to spend the money, the person said.

That fund, which had seen heavy valuation writedowns in the wake of the credit crisis, returned to par at the end of March.

The firm could hold a first close on its next fund in the first half of 2012, the person added.

About 70 percent of the plannned fund will go into investments with a strong European focus, while the remainder will target international deals. (By Simon Meads; Editing by David Cowell) ($1=.6963 Euro)