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Permira ups cap, closes in on €11bn

The pan-European LBO leader has told prospective investors that Permira Europe IV will accept an additional €1bn in commitments to close on a revised target of €10.835 billion.

Permira, the London-based private equity investor currently raising Europe’s largest buyout fund in history, has told investors that the new fund, Permira Europe IV (2006), will accommodate an additional €1 billion in capital commitments than initially planned. According to investors familiar with Permira’s marketing, the fund is now expected to close on €10.835 billion ($13.6 billion).

Even with the revised target, the new fund will not be able to match investor demand

The decision confirms that institutional demand for extra-large buyout funds remains undiminished. Funds even larger than Permira’s are currently being marketed by US firms The Blackstone Group, Kohlberg Kravis Roberts and Texas Pacific Group. Each of them is expected to raise significantly in excess of $15 billion.

Permira, whose previous fund closed in 2003 on €5.1 billion, originally entered the market with an €8.5 billion target and room for an additional 15 percent of that figure to raise €9.775 billion. Sources say that the firm is expected to hold a first close on this number by the end of June. SVG Capital, the quoted asset manager and Permira’s largest limited partner, has already committed €2.8 billion towards the €9.775 billion interim total.

In addition, SVG is working to complete a number of structured products in order to accommodate additional client demand of approximately €1 billion. The additional capital is expected to be added to Permira Europe IV in September, giving the fund a capital base of €10.835 billion.   

The sources say that Permira has discussed the increase with its advisory board and informed investors in its funds last week. Even with the revised target, the new fund will not be able to match investor demand, the sources say.

Permira declined to comment.

Once closed, the new fund will dwarf in size Europe’s previously largest private equity fund, a €6 billion structure set up by CVC Capital Partners in 2005. That fund is currently at an advanced stage of deploying capital, which has prompted speculation that CVC may return with a new offering before long.