Listed UK investment group SVG Capital, which invests primarily in funds managed or advised by London-based buyout house Permira, has announced that it intends to invest €2.8 billion ($3.4 billion) in the Permira IV fund. The fund, which was recently launched, is aiming to raise €8.5 billion in total.
In an interview with PEO, chairman Nicholas Ferguson said that at 33 percent of the intended total, SVG Capital’s commitment to Permira IV is proportionately larger than that made to Permira’s previous funds. He said the firm had committed €200 million to the €800 million Permira I fund in 1997; €750 million to the 2000-vintage €3.3 billion Permira II; and €650 million to the €5.1 billion 2003-vintage Permira III. Permira funds represent 75 percent of SVG Capital’s portfolio in total.
Ferguson said SVG’s commitment reflected its confidence in Permira as a firm “that has established itself in the top decile of European buyout funds, which still has the determined austerity to inch by inch make itself even better”. Because of the size of the investment, Ferguson said SVG had conducted “three to four months” of due diligence, in spite of its longstanding relationship with Permira.
To support its commitment, SVG said it would be increasing its credit facility from €285 million to €600 million and would also be issuing approximately €200 million of bonds through a private placement in the coming months.
In addition to SVG Capital’s commitment, SVG Advisers, the third-party fund management business of SVG Capital, announced that it expected to make a commitment of approximately €1 billion in aggregate to Permira IV through several feeder vehicles. “These vehicles will seek to provide investors with an attractive, structured access to Permira IV, typically at a lower minimum investment threshold than the fund itself,” said SVG in a statement.
SVG Advisers currently has €2.4 billion of third party funds under management in funds of funds; public equity products that use private equity investment techniques; and feeder vehicles focused on Permira funds.
If it reaches its €8.5 billion target, Permira IV will become the largest buyout fund raised in Europe – beating the €6 billion collected by CVC Capital Partners last year. The fund’s core focus will continue to be on European buyouts, while also considering opportunities originated by its offices in Tokyo and New York.