Permira’s biggest investor Schroder Ventures International Investment Trust (SVIIT) has announced two new fund-of-funds offerings. Schroder Private Equity Fund of Funds II (SPEFOF II) will be launched at the end of this month in conjunction with Schroders. SPEFOF II is the successor to Schroder Private Equity Fund of Funds I, which is listed in Dublin. SVIIT has also started the marketing for P123, described as a fund of Permira funds and coinciding with the launch of Permira’s third buyout fund, Permira Europe III. The target of this fund has not yet been disclosed, but it will build on the success of its two predecessor funds and will focus on European buyouts and buy-ins across a range of industries and sectors.
Permira Europe III will join the league of mega funds fighting for deals in Europe such as Cinven’s €4.4 billion offering, Candover’s €2.3 billion fund and Bridgepoint’s €2 billion effort, all of which closed last year.
Alice Todhunter of Schroder Ventures explains the rationale behind P123. “Permira is a first class group and one of the main drivers behind SVIIT’s growth to date. SVIIT will be making a substantial direct commitment to Permira Europe III and the creation of P123 allows us to increase this exposure without over-stretching SVIIT.”
SVIIT will commit to 40 per cent of the fund by transferring approximately €135 million of assets and €50 million of uncalled commitments in Permira Europe I and II to P123 in return for 40 per cent of P123. The remaining 60 per cent of P123 will come from external investors. The transfer of 25 per cent of SVIIT’s interest in Permira Europe I and 18 per cent from Permira Europe II in return for a substantial holding in P123 will enable SVIIT to gain a greater exposure to Permira Europe III while maintaining both directly and indirectly through P123 the majority of its exposure to Permira Europe I and II.
The exact amount to be transferred by SVIIT will be dependent on valuations at the time of transfer and the number of shares placed with other investors. It is expected that the benefits from this transfer will outweigh any dilution on the transferred assets. SVIIT is seeking shareholder approval and anticipates the transfer to take place in the second half of the year.
P123 will commit €450 million to Permira Europe III. SVIIT will therefore have €180 million (40 per cent) of this commitment on a look-through basis. SVIIT will also benefit from management fees on P123 of approximately €20 million
SVIIT reported a 9.5 per cent increase in net assets in the six months to December 2002, boosted by the successful sale of Homebase at a substantial premium (£58 million) to its June value. In total, SVIIT paid out £122.7 million during the six months to 31 December, funding eight new and 18 follow-on investments – among these were the £56.5 million Travelodge and Little Chef transaction, SVIIT’s largest to date, and the £31.8 million Italian public-to-private of Ferretti.