Permira to close latest fund on €7.25bn upper limit

The firm has stopped marketing its sixth fund after collecting €7.25 billion from investors, according to people familiar with the matter. It is currently wrapping up legal documentations ahead of a final close in the coming weeks. Permira held a €6.3 billion first close on the vehicle in July. The fund had a €6.5 billion target.

Permira’s sixth fund, which officially came to market in the first quarter of this year, is significantly larger than its previous fund, for which it amassed €5.3 billion in June 2014.

The fundraising period was also far shorter than for its fifth fund, which spent nearly three years in market. The firm had experienced some issues in its portfolio following the global financial crisis, which made that fundraising more difficult, investors said at the time. However, Permira’s fourth fund has improved significantly since the crisis.

The private equity firm has returned a whopping €15 billion to investors since 2012, according to an investor document that Permira sent to investors in November and seen by sister publication Private Equity News. Most of this capital came from the investments made in Permira IV, which is currently valued at 1.7 times.

Realisations from the fund included Permira’s $ 1.5 billion sale of Intelligrated, a North American privately held supplier of warehouse automation systems, which netted the firm a 5.2x return, and its sale of education software business Renaissance Learning, which generated the firm a 4.1x return, according to the investor document.

Oregon Investment Council, which proposed to commit $ 250 million to Permira’s latest fund, said in notes published in June 2016 that the firm had shown “solid investment performance”. It said that since 1997, five previous Permira funds had invested €21.4 billion. As of December 31, 2015, these investments had generated an aggregate net internal rate of return of 21.5% and a net total value multiple of 1.6x, according to Oregon.

Permira joins a number of other large cap funds that have raised capital swiftly this year. Boston-based Advent International amassed $ 13 billion for its latest global buyout fund in March, while in June, London-based Cinven closed its sixth fund on €7 billion. In October, Private Equity News also reported that Apax Partners was nearing a final close on its latest global buyout fund after collecting $ 9 billion for the vehicle.

Terms on Permira’s latest fund included a “market management” fee and a standard carried interest, according to Oregon.

The fund also has an 8% preferred return – the threshold the firm has to reach before it can start taking profits, also known as carried interest, according to Oregon. Private equity firms typically charge a 1.5% to 2% management fee and take 20% of the profits.

Permira offered a discount on the management fee to institutions that committed more than €200 million. If an investor pledged €400 million or more to Permira’s fund it would be entitled to an even greater discount, one investor said.

Permira declined to comment.

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