Goldman unit in talks to buy stake in private equity firm Permira

UK private equity firm is known for backing companies including Hugo Boss and Duff & Phelps

A unit of Goldman Sachs is in talks to buy a stake in Permira, a large international private equity firm, according to people familiar with the matter.

In the deal being discussed, Petershill, an arm of Goldman Sachs that invests directly in alternative investment firms, would pay €500m, or about $560m, for a minority stake in Permira, the people said. The potential deal would value the buyout firm at more than $5bn, one of the people said.

Talks are continuing, and it isn’t guaranteed that a deal will be reached.

Such a lofty valuation for Permira would be the latest sign that investors are optimistic about the growth and performance of private equity and private markets more broadly. Shares of publicly traded private equity firms have surged as they have abandoned their partnership structures and become corporations, allowing them to be included in more indexes.

Private equity firms raised more than $500bn last year, according to data provider Preqin, bringing total assets under management in the industry to more than $4tn. Institutional investors have flocked to the asset class in a bid to generate higher returns than they can make in stocks or bonds.

Permira had run a sales process that also attracted interest from other bidders, including a unit of Blackstone Group and Neuberger Berman Group’s Dyal Capital Partners, some of the people said.

Selling a stake has proven a popular alternative to going public as a number of private equity’s largest players did roughly a decade ago. Some of the industry’s best-known names, including Vista Equity Partners and Silver Lake, have sold stakes. Firms sometimes use the proceeds to finance expansion into new business lines or to buy out older partners who are retiring.

Buyers typically get a stream of fees from 1% to 2% on funds the firms manage and share in the profits made from the firms’ investments.

A sale at a valuation of more than $5bn would be the latest sign of a big turnaround at Permira. One of the UK.s oldest buyout firms, founded in 1985, it operated as Schroder Ventures Europe until rebranding in 2001.

Permira grew rapidly, emerging as a notable rival to private-equity giants like Blackstone and KKR. In 2006, the firm raised €11bn for what was then Europe’s biggest-ever private equity fund.

But a series of badly timed investments made before the financial crisis stalled its rapid growth, and Permira struggled to raise money from investors in the years that followed.

The firm has since bounced back, riding a broader wave of interest from institutional investors, and has €44bn in committed capital and offices around the world. It closed on €11bn for its latest flagship buyout fund in October of last year. Permira also owns a stake in a private-credit business and raised a $1.7bn fund targeting smaller deals in 2019.

In one notable success, Permira more than doubled its money on its investment in fashion house Hugo Boss.

In January, Permira announced a deal to sell Duff & Phelps to a group led by Stone Point Capital and Further Global for $4.2bn. The firm had acquired the valuation and corporate-finance advisory business for $1.75bn in 2018. Last month, Permira agreed to buy a majority stake in luxury-sneaker brand Golden Goose from Carlyle Group.

The strategy of purchasing private equity stakes has been dominated by a handful of players including Petershill, Dyal and Blackstone. Collectively, they have raised billions of dollars from investors to purchase stakes.

Petershill, which owns stakes in technology-focused firm Accel-KKR, energy-infrastructure investor ArcLight Capital Partners, and oil-and-gas manager Riverstone Holdings, is in the process of raising a new fund, according to people familiar with the matter.

Source: Financial News

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