$1.5B Deal Highlights Active Year In States For Permira

Target: Genesys

Price: $1.5 billion

Sponsor: Permira, Technology Crossover Ventures

Seller: Alcatel-Lucent

Financial Adviser: Sponsor: Goldman Sachs ; Seller: Qatalyst Group

Legal Adviser: Sponsor: Fried Frank; Seller: Jones Day

U.S.-based deal opportunities are picking up for Permira, the U.K.-based shop with almost $28 million in committed capital under management that opened offices in New York and Menlo Park in 2002 and 2008, respectively. However, an executive at the firm cautioned that the choppy fundraising market could impair future deals.

Permira, along with Technology Crossover Ventures and other co-investors, agreed on Oct. 19 to buy Genesys, a supplier of enterprise software and services, from Alcatel-Lucent in a deal valued at $1.5 billion. The parties expect to close the deal by the end of the year or early next year.

If Permira closes the deal, it will be its third in the United States this year, a healthy pick-up in activity considering its last two U.S deals took place in 2009 and 2006. The investment would come out of Permira’s fourth fund, a €9.6 billion ($13.4 billion) closed in 2006. The firm is back in the market for its fifth fund, seeking €6.5 billion, sister news service Reuters reported in June.

In April, the firm bought Seal Beach, Calif.-based BakerCorp, a provider of rental equipment for companies in the industrial markets, for $960 million. And earlier this month Permira closed its take-private of Renaissance Learning Inc., a Wisconsin Rapids, Wis.-based provider of technology-based student programs for kindergarten through 12th grade schools. The price was approximately $440 million.

“We think this has been a good year for deal pace and we’re thrilled with it given how difficult the financing market has been,” Brian Ruder, a partner in the Menlo Park office who helped lead the Genesys deal, told Buyouts.

Ruder said the firm is also looking closely at several other investment opportunities in the United States. However, he said he is only cautiously optimistic on future deal opportunities given how difficult it has been for buyout firms to obtain satisfactory financing for deals, especially large ones.

Credit markets, which rebounded earlier in the year, have since tightened for several reasons, including the debt crisis in Europe, general uncertainty about the economy and volatility in the stock market. The uncertainty has put a damper on deal activity: U.S.-based sponsors, for example, had closed 185 deals in the third quarter as of Sept. 15, down 25 percent from the 247 deals closed in the second quarter.

Ruder declined to discuss details of the financing for the Genesys deal, though Permira is reportedly investing an amount of equity that is roughly equal to the amount of financing banks are providing—a hefty amount considering sponsors typically commit around 35 percent of purchase price’s with equity.

As for Genesys, Ruder said Permira plans to expand it with acquisitions and with new lines of business. The deal is a long time in the making for Ruder, who joined Permira in 2008 after stints at Francisco Partners and Hellman & Friedman. He said he’s been following the company for 10 years.