| |||||||||||
| |||||||||||
 With the pension funds and other institutional investors that provide the lion's share of capital for private equity funds feeling the squeeze of mounting losses from plunging debt and equity markets, buyout shops have been having a harder time getting them to meet their capital calls. With that in mind, it looks like U.K. buyout firm Permira Advisers LLP is offering its investors a chance to reduce the size of their commitment to the 2006 buyout fund Permira IV.Permira is offering to let its limited partners reduce the size of their commitments to the $14 billion investment fund raised in 2006. According to a statement released today by Permira limited partner SVG Capital plc, the buyout shop is allowing investors to reduce their commitments by 40% while accepting a 25% reduction in their share of future distributions from the fund. The investors would also pay full management fees based on their original commitments. Easing of the size of capital calls for the fund, which is 52% invested already, may also signal capitulation from private equity firms on being able to do deals with debt markets shut down. As the bulk of megafunds collect management fees on billions in commitments, they have found very few opportunities to put that money to work, and with big write-downs on portfolio companies on the way, they're having an even harder time providing the outsized returns their investors expect. Should the state of affairs remain this way, and it probably will for the foreseeable future, expect to see a meeting of the minds between general and limited partners, where both fees and commitments are reduced. - George White Update: A spokesperson from Permira said that the firm expects only a very small number of its LPs to take the offer, but that firm thought it was the right thing to do considering the current environment. Further, Permira IV which closed with commitments of €11.1 billion is structured so that the program could only reduce its size to €9.5 billion at the most. See SVG Capital statement See Dealscape post on PE write-downs CategoriesPrivate capital video
Categories
Blog roll
Archives
| |||||||||||
|
|
|
|
|
©Copyright 2009, The Deal, LLC. All rights reserved. Please send all technical questions, comments or concerns to the Webmaster.
