UK-listed SVG Capital has committed €2.8bn (£1.9bn/US$3.4bn) to Permira’s fourth fund in what is believed to be the largest ever private equity investment by a European institution.
The Permira IV fund is targeting €8.5bn but could raise €10bn, which would make it the largest European fundraising ever. Last year, UK-based peer CVC Capital Partners closed at €6bn before fees.
However, Permira has dropped the “Europe” label from its fourth fund, indicating that it is expecting to increase the sum invested in US and Asian deals from its New York and Tokyo offices, although its core focus would continue to be European buyout opportunities, SVG said. In February, Permira agreed to pay US$765m for Aearo Technologies in the US.
Permira’s funds make up 75% of SVG Capital’s portfolio, and its Europe I, II and III funds have delivered top decile returns. Nicholas Ferguson, chairman of SVG Capital, said: “We believe Permira to be one of the world’s best private equity firms, delivering returns to investors that have significantly outperformed public markets and industry peers.”
A rival funds of private equity funds manager noted that buyout firms tended to maintain their edge “in a virtuous circle” as top managers and companies wanted to work with them, banks gave them the best rates and loan packages and advisers referred deals to them.
In addition, SVG Capital’s fund management arm, SVG Advisers, is expected to source about €1bn of the firm’s commitment to Permira IV. As a result, SVG Advisers will be launching several feeder vehicles for Permira IV at a lower minimum investment threshold than the fund itself.