Kurt Bjorklund, Permira Advisers LLP’s co-managing partner, said his 9.6 billion-euro ($13.3 billion) private equity fund has rebounded, recovering almost all the writedowns its recorded during the credit crisis.
Permira’s fund, which owns stakes in clothing designers Hugo Boss and Valentino Fashion Group SA, is now “close to par,” up from a 40 percent markdown at the end of June, Bjorklund, 41, said in an interview at his office in London.
“The first part of the fund is recovering rapidly and includes some strong performers,” he said, citing pet food maker Provimi SA, casino operator Galaxy Entertainment Group Ltd. and chemical maker Arysta LifeScience. “The whole second half of the fund, invested since the recession hit, includes real winners. We’re now working for the upside.”
Firms including KKR & Co. are marking up the value of their holdings as public markets rebound and companies emerge from the most severe recession in more than 70 years. Permira had marked down its Permira IV fund, raised in 2006, by as much as 60 percent in December 2008. More than half of the funds raised in 2006 are posting losses of less than 4 percent, up from a median 15 percent loss in 2008, according to London-based Preqin Ltd.
Six out of the seven companies Permira acquired before Lehman Brothers Holdings Inc. collapsed in 2008 “are well above, from an operating performance point of view, where they were at the time of the acquisition,” Bjorklund said.
Those include chipmaker Freescale Semiconductor Inc., Hugo Boss and German broadcaster ProSiebenSat.1 Media AG, he said. The three investments, representing more than 500 million euros each, are among the five largest in Permira IV, the firm’s most recent fund.
Bjorklund, a former Boston Consulting Group consultant, headed Permira’s Stockholm office for five years and became co-managing partner in 2007 with Tom Lister, 46, who is based in New York. He worked on Permira’s investments in companies including satellite system operator Inmarsat Plc and TDC A/S, Denmark’s largest telephone company.
SVG Capital Plc, the private equity firm’s largest investor, said last week it marked up the value of its stake in Hugo Boss and Italian luxury label Valentino, Permira’s largest holding, by 37 percent last year after operating profit jumped.
The investor also boosted the value of casino operator Galaxy Entertainment by 180 percent after shares of the Chinese casino operator almost tripled. It marked up pet food maker Provimi’s value by 64 percent and the value of Japanese chemicals maker Arysta LifeScience by 43 percent.
SVG values its stake in Hugo Boss and Valentino at 20 percent less than its $2.5 billion purchase price. German broadcaster ProSiebenSat.1 Media AG is still marked down 52 percent from the original investment, according to SVG. Freescale Semiconductor, marked up 89 percent in 2010, is valued at less than half the amount Permira paid for it in 2006. The firm, which owns the chipmaker with Blackstone Group LP, TPG and Carlyle Group, is preparing an initial public offering for Freescale.
Permira invested about one-third of its fund before the financial crisis. Investments made since, such as the 2.5 billion-euro acquisition of U.K. pay-TV technology firm NDS Group Plc with Robert Murdoch’s News Corp., and the 300 million-euro purchase of U.K. life insurance company Just Retirement Plc, are helping offset the few investments still marked down, Bjorklund said.
Permira still aims to generate net annual returns that are about 15 percentage points higher than public markets, the same level that the firm has achieved over the past 25 years, Bjorklund said.
“That magnitude of premium is what our business is about,” Bjorklund said.
Permira has “a couple of billion euros” to invest before September 2012, when the fund’s purchase period expires, and the firm hasn’t yet made a decision on when it will start raising a new pool, he said.