Global private equity firm Permira is currently in discussions with its investors to assist limited partners that may struggle to meet their capital calls.
SVG Capital, the London-listed asset management group that is Permira's largest investor, noted in its interim management statement that Permira is examining assistance measures as the result of conversations with investors in recent weeks about the current market environment and its impact on private equity allocations.
SVG is one of a number of large investors to publicly acknowledge the issue of liquidity in the current market as capital calls occur with few distributions to balance the capital outflows.
“Current market conditions continue to influence the level of [capital] calls, which we expect to be subdued for the next 12 months,” said SVG in the statement. “Equally, the environment has impacted exit opportunities and in the absence of a meaningful recovery in the markets, we do not expect a significant level of distributions from the portfolio in the next 12 months.”
SVG estimates capital calls for all of 2008 to total roughly £527 million (€647 million; $824 million). For the same period, the firm estimates distributions of only £336 million, which includes the secondary sale of fund interests in May, highlighting the imbalance creating liquidity troubles for LPs. Additional proceeds of £116 million resulted from the raising of convertible bonds and the issue of senior notes.
As of 7 November, the firm had uncalled commitments of £1.25 billion and SVG expects capital calls of £131 million in January 2009.
SVG wrote down the net asset value of its portfolio by 12.3 percent in its interim results released in August. The firm attributed the markdown to falling public market comparables across the portfolio, emphasising at the time earnings at the underlying portfolio companies were on the whole holding up well. The market responded to the interim results with a 2.3 percent lift in the SVG share price to 601p.