Permira Advisers Ltd.

Permira Case Assignment

Guilherme Pedrosa, Gunther Stanjek, Vitor Elias

Professor: Andrea Minardi

Permira Advisers Ltd. was founded in 1985 and is based in London, United Kingdom with 14 additional offices across Asia, Europe, and North America. Permira is a private equity firm specializing in mature, emerging growth, industry consolidation, growth capital, expansion financing, restructuring, financial acquisitions, leveraged buyouts, buyins, and growth buyouts. The firm seeks to invest in medium to large companies in the chemicals, consumers, industrial products and services, technology, media, and telecommunications (TMT), financial services, trade, life sciences, and healthcare. The PE company invests in companies based in Benelux region, Europe, Middle East, United States and Canada, Latin America and Caribbean, Nordic region, and Asia Pacific with a focus on East Asia. It prefers to invest in companies with enterprise values up to $4,302.03 million, transaction sizes of $650.28 million and above; and deal size between $717 million and $4,302.03 million. It makes equity investments between $60.8 million and $716.68 million. The firm serves as non-executive directors on the board of the portfolio companies and prefers to make control-stake buyouts. It seeks to hold its investments for a period of five to 12 years.

The company Portfolio includes 250 investments in 30 years (more than 30 current investments), that represents €30bn of committed capital. The Key Executives are Mr. Kurt Björklund (Co-Managing Partner and Director), Mr. Thomas H. Lister (Co-Managing Partner and Director), Mr. Duncan Smith (Finance Director), Mr. Jim Tsao (Head of China and Chairman) and Mr. Chris Davison (Partner, Director of Communications, and Head of Investor Relations)

Permira is a impact PE Firm because has developed its framework for managing ESG risks and opportunities by drawing on LP priorities, best practices from the private equity industry, and international standards of responsible investment. The company is a signatory to the UNPRI (The United Nations-supported Principles of Responsible Investment) and PEGCC (Private Equity Growth Capital Council) that developed Guidelines for Responsible Investment focusing on environmental, health, safety, labor, governance and social considerations specifically in the context of private equity investment, and adheres to the EVCA guidelines for disclosure. Furthermore it was awarded the BVCA Responsible Investment award in 2012 for its commitment to integrating reporting to both its investors and stakeholders on all aspects of its ESG engagement. Throughout the investment processes the ESG and sustainability elements are expected to be a crucial part of the governance of the portfolio companies. It’s expected from companies in the funds’ portfolio to set up these ESG practices in their daily routine.

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The process that  PE firm uses to address ESG dimension in the PE business is:

1st- Selection: Asset Selection and Origination

-ESG evaluation and analysis of portfolio investments and teams. As GPs begin to develop a framework for managing ESG investment considerations, they must make specific decisions related to its structure, capabilities, and resources.

2nd-  Entry: Diligence & deal execution

-ESG is a part of the due diligence performed by investment teams including the usual diligence (compliance, liabilities, risks, opportunities, etc.) with the support from ESG specialists. A risk assessment primarily evaluates a target company’s compliance with local laws and regulations with a view to mitigating reputational risk. A high ESG risk assessment often precludes investment. Proactive risk mitigation often entails only a minimum level of compliance. ESG aspects value creating over lifetime of investments.

3rd- Stewardship: Value creation (GPs predominantly focus on value creation by improving eco-efficiency and developing environmentally sustainable products and services) & monitoring Business and understand the progress that portfolio companies have made with their own ESG programmes and develop a method of reporting this progress to investors, including site visits to identify opportunities to improve.

4rth- Exit: Monetisation

-Precise review of progress achieved by portfolio companies on ESG during the investment lifetime. Insights provided for an eventual exit procedure and awareness of possible acquisitions.

ESG’s matters are infused in Premira’s investment strategy. The investment team spots prosperous large scale trends to endorse. Subsequently the firm tries to identify market leading companies with high growth potential inserted in those prosperous trends, supporting these companies over an average of five years. Then identifying companies that conciliate three fundamental aspects: growth, market leader and global potential. Finally converting them into global leaders with: world-class management, strategic focus, operational improvement and organic expansion.

Managing environmental, social and governance was always part of any company’s objectives and scopes, specially when considering social and business impacts that could come from not doing it. The Permira Fund can be mentioned as an example of esG (companies with a portfolio with a robust governance structure), hence that fact that, in its investment in Netafim, the fund collaborated with the founding of Kibbutz, as well as creation of its board.

Permira's framework for ESG risks management come from focusing on Leading Partners priorities, applying best private equity industry practices and having achieved international standards of responsible investments.