CONNECT TO GROWTH TO CONNECT ANNUAL REVIEWANNUAL 2016 CONNECT , TO

PERMIRA ANNUAL REVIEW 2016 BUYING WELL

2016 NEW INVESTMENTS

An organic personal care €2.2bn brand in Japan Equity invested

Largest e-commerce player A provider of integrated HR software and internet brand in Poland solutions and outsourcing

A fund administration and An omnichannel fashion retail corporate services provider business for private members

One of Italy’s largest pet care An Asian leader in outsourced retail chains corporate services

Find out more about the Permira funds’ investments on page 7

SELLING WELL

2016 DIVESTMENTS €4.2bn Divested

A provider of online genealogy A provider of advanced automated material handling solutions

A supplier of minimally invasive A leading provider of products surgical delivery systems and services to the over 50s

Find out more about the Permira funds’ divestments on page 8 Permira at a glance

The Permira funds have delivered market-leading returns for our investors for over 30 years by partnering with more than 200 ambitious businesses to support their growth. We are proud to work closely with exceptional management teams to help them solve complex issues. By providing patient capital, board support and access to our networks, we help transform good businesses into great global leaders.

MORE THAN 30 YEARS’ ACROSS OUR EXPERIENCE GLOBAL PLATFORM Permira was a pioneer in European We have more than 240 people in . Since 1985, the Permira 14 offices across , the US and . funds have made over 200 investments. Our teams help companies realise their global growth ambitions, find acquisition targets, attract new management and develop strategic relationships.

30+ Years 14 Offices

200+ 28 Investments Partners

240+ Employees

€32bn Funds raised PARTNERING WITH TO DRIVE IN FIVE MANAGEMENT GROWTH SECTORS We partner with world-class We focus on companies with significant The Permira funds invest in companies management teams to unlock the potential to grow and become global across five sectors. Our teams look beyond full potential of the companies in industry leaders. This growth is the core the macro to identify sub-sectors with which the Permira funds invest. driver of returns. significant underlying growth potential. Equity invested since inception:

Consumer 1 Long term €8.3bn Average 5-year investment period

17% Year-on-year portfolio valuation growth €2.7bn2

Shared vision 16% Healthcare Mutually agreed business plan P5 portfolio EBITDA growth c.€900m3 & financial targets

12% Industrials P5 portfolio sales growth €4.4bn4

Partnership Strategic partner for management constructive board members to Technology support key decisions €8.0bn5

1 As at 31 March 2017. 2 As at 31 March 2017. Includes Tricor which completed in April 2017 and Alter Domus which completed in May 2017. 3 As at 31 March 2017. Includes LSNE which completed in April 2017. 4 As at 31 March 2017. Includes DiversiTech which signed in April 2017. 5 As at 31 March 2017. PERMIRA ANNUAL REVIEW 2016 1 WHO WE ARE

Contents

SECTION 1 ARE WE WHO 1. 2016: A year in review WHO WE ARE 2016: A year in review 2 Permira combines a 30+ year track record, long-standing presence in the world’s major markets and deep domain expertise across five sectors. This is what enables us to help management teams grow ambitious companies. This strategy has continued to deliver great success in 2016. SECTION 2 SELLING WELL & BUYING 2. BUYING & SELLING WELL Some of our achievements in 2016 include: Intelligrated case study 4 Investing well 6 New investments 7 Selling well 8

SECTION 3 DRIVE GROWTH PARTNERING TO 3. 2016 €4.1bn PARTNERING TO DRIVE GROWTH Opened Shanghai office Returned to investors Magento case study 10 Partnering to drive growth 12 Portfolio group team 15

SECTION 4 SECTOR FOCUS 4. SECTOR FOCUS €7.5bn €1.1bn Allegro case study 16 Consumer 18 Financial Services 22 Raised for Permira VI Raised for direct lending and Healthcare 26 structured credit funds for PDM Industrials 30 Technology 34 SECTION 5 PDM 5. PDM Eaton House Group case study 38 PDM Q&A 40 ESG approach 44 CLEAN case study 45

SECTION 6 RESPONSIBLY INVESTING 6. INVESTING RESPONSIBLY Dr. Martens case study 46 ESG approach 48 Intelligrated case study 52 Teraco case study 53 CONTACT US 7.

SECTION 7 CONTACT US Our offices 54 Disclaimers 56

AT A GLANCE 2

2016: A year in review The event-driven volatility that we witnessed throughout 2016 continues into 2017. In addition to the obvious risks involved with operating in volatile markets, valuations of both public and private companies are near historic peaks, making it even more important to identify and back the right companies from the outset.

Investment conviction Celebrating a decade of Investing in our people to make in uncertain markets Permira Debt Managers the most of future opportunities Permira thrives on complexity. Our sector It has been 10 years since we launched PDM, We are stepping up investment in our teams look ‘beyond the macro’ to identify and we are very pleased by the progress made talent platform, given that our people pockets of sustainable growth. Over the and the returns delivered over that time. are the powerhouse of our business. last year, the Permira funds have acquired The PDM funds have invested c.€4 billion In the past year, we have welcomed a diverse range of businesses, including of capital in c.100 businesses, giving both 30 new people to the team. Allegro, Alter Domus, Arcaplanet, John investors and companies a very high level of We have also invested further to grow Master Organics, P&I, Schustermann confidence in their ability to deliver. In 2016, our Portfolio group to a 10-strong team, & Borenstein and Tricor. PDM continued to grow, raising €1.1 billion for maximising our ability to support our direct lending and structured credit funds, Using the insights gained from being one of management teams in delivering their and making 11 new investments. private equity’s leading technology investors, ambitious growth strategies. we also ensure that the Permira funds' portfolio is on the right side of disruptive technology shifts. This year saw the exit of the funds' partnership with Intelligrated which benefited from the enormous growth in e-commerce in recent years. By responding to this in the right way and at the right time, the business was sold last summer for over five times the cost of the original investment.

Permira thrives on complexity. Our sector teams look ‘beyond the macro’ to identify pockets of sustainable growth.

KURT BJÖRKLUND CO-MANAGING PARTNER

KURT BJÖRKLUND CO-MANAGING PARTNER PERMIRA ANNUAL REVIEW 2016 3 WHO WE ARE

€2.2bn ARE WE WHO 1. Equity invested in 2016 SELLING WELL & BUYING 2.

Building strong investor relationships A responsible, sustainable approach to investing The ability to build long-term, mutually beneficial relationships with our investors is We were one of the first large investment The overall economic outlook for 2017 central to what we do. We continue to invest firms to embed ESG considerations into our

is positive, with indicators suggesting DRIVE GROWTH PARTNERING TO 3. in our team and infrastructure so that we decision-making processes. As long-term that average global growth will can meet the needs and expectations of our investors, the sustainability of the companies investors around the world. It is through these that the Permira funds back is of crucial continue at the upper end of what strong relationships that we were able to close importance, so it is sound business sense to we have seen over the past five years. Permira VI at €7.5 billion. consider the wider non-financial context in TOM LISTER which they operate. CO-MANAGING PARTNER Looking ahead to identify key In some of the Permira funds’ investments we growth markets have gone further, actively backing companies The overall economic outlook for 2017 is that provide solutions to long-term sustainability SECTOR FOCUS 4. positive, with indicators suggesting that global issues. Netafim, a global leader in drip irrigation, growth will continue at the upper end of what is revolutionising the ability of farmers around we have seen over the past five years. the world to increase the yield from their land while using less water. Pharmaq, a highly We continue to see strong deal-flow in Silicon successful former portfolio company, provides Valley, where we are increasingly recognised health solutions to fish farms, helping to as one of the few players to combine a local alleviate the strains on marine ecosystems presence with a global office network and

as ever-expanding populations eat more fish. PDM 5. the cross-sector expertise that is becoming ever more relevant in technology transactions. We believe that our combination of 30+ years accumulated sector knowledge, our clear More attractive opportunities are also strategy and our cohesive culture are the basis emerging in Asian markets. Over the last few of Permira’s competitive advantage. This years, we’ve grown our investment team here combination enables us to confidently take and in 2016 opened a new office in Shanghai. a view on sector trends and the Permira funds New investments in Tricor and John Masters to invest with conviction behind the companies Organics are good examples of opportunities best placed to exploit those trends globally. RESPONSIBLY INVESTING 6. we are finding in the region.

TOM LISTER CO-MANAGING PARTNER CONTACT US 7.

4

INDUSTRIALS

COUNTRY: US | ACQUIRED: 2012 | EXIT: 2016 Intelligrated is a leading North American-based provider of advanced automation and fulfilment solutions. Its systems drive productivity for e-commerce companies, retailers, manufacturers and the parcel industry. The company was sold in 2016 after four years in the Permira funds portfolio.

TOGETHER WE ACHIEVED More than 300% growth in Significant enhancement the sales pipeline and over of software capabilities 90% revenue growth and aftermarket Major new customer wins, Expansion into emerging including UPS, Amazon, markets USPS, Nordstrom, Walgreens and Tesla

THIS WAS ACCOMPLISHED BY More than tripling R&D Establishing a local presence investment in new systems in Brazil and China, which and capabilities, including in are deep consumer markets automated storage/retrieval and still in the early days of systems, a full parcel solution e-commerce growth to enter the high-growth Completing three acquisitions, global parcel market and including two small software robotic solutions businesses and the acquisition Strategic investments in of United Sortation Solutions, software products and a supplier of specialised capabilities and in building products to Intelligrated and a dedicated aftermarket a key supplier to the US Postal sales force Service, further extending Intelligrated’s capabilities Strengthening the leadership in the parcel segment team with key hires in software, aftermarket and sales

Intelligrated is a far better company today than it was four years ago and Permira deserves a tremendous amount of credit for that.

CHRIS COLE, INTELLIGRATED, CEO AND PRESIDENT 3 >90% 120% Acquisitions Revenue EBITDA growth growth

See more on our sectors p17 PERMIRA ANNUAL REVIEW 2016 5 BUYING & SELLING WELL 2 ARE WE WHO 1. BUYING & SELLING WELL

SECTION 2 SELLING WELL & BUYING 2. BUYING & SELLING WELL Intelligrated case study 4 Investing well 6 New investments 7 Selling well 8 DRIVE GROWTH PARTNERING TO 3.

SECTOR FOCUS 4. PDM 5. RESPONSIBLY INVESTING 6. CONTACT US 7.

6

Investing well Permira’s strategy is designed to identify investment opportunities in sectors that have the potential for long-term growth irrespective of trends in the wider economy.

What we look for: The DNA of a Permira funds investment. Our sector teams identify attractive sub-sectors that benefit from strong underlying growth trends and then begin detailed analysis of the most attractive companies operating in that space. At a micro level we then undertake detailed due diligence on the company, its management and its potential for significant expansion.

GROW TH SUB-SECTOR

PRIOR ACCESS OPPORTUNITY TO THE FOR R APID OPPORTUNITY EXPANSION

MULTIPLE WORLD-CLASS VALUE CREATION MANAGEMENT LEVERS PERMIRA ANNUAL REVIEW 2016 7 BUYING & SELLING WELL

New investments ARE WE WHO 1. The Permira funds enjoyed a strong year in 2016 in €2.2bn terms of both new investments and portfolio company Equity invested divestments. The funds made the following investments in 2016 in the year. SELLING WELL & BUYING 2.

INVESTMENT TRANSACTION COMPANY FUND SECTOR DATE SIZE INVESTMENT CASE

May 2016 –– Driving growth through a combination of rapid store P5 €361m roll-out, consolidation of a highly fragmented market and optimisation of in-store performance DRIVE GROWTH PARTNERING TO 3.

One of Italy’s largest pet care retail chains

June 2016 –– Creating value through further store roll-out in Japan,

P5 €321m accelerated new product development and an enhanced retail marketing strategy

An organic personal care

brand in Japan SECTOR FOCUS 4.

November –– Building a strong platform for consolidation of the P5 €903m relatively fragmented market in this space in 2016 and across Europe

A provider of integrated HR software solutions and outsourcing

March 2017 –– Using multiple levers to drive growth, including pricing

P5 €713m and packaging optimisation, customer segmentation PDM 5. and cross-border selling An Asian leader in outsourced corporate services

January –– Improving the general ecosystem to increase conversion P6 €3.1bn and average basket size, and enhancing user experience 2017 for both buyers and sellers Largest e-commerce player and internet brand in Poland RESPONSIBLY INVESTING 6.

January –– Increasing monetisation of existing customers and P6 €730m targeting new customers through use of big data analytics, 2017 pricing, CRM and marketing automation technologies An omnichannel fashion retail business for private members

April 2017 –– Accelerating international expansion, with a particular P6 €527m focus on the US A fund administration and CONTACT US 7.

corporate services provider 8

Selling well The Permira funds completed the following divestments in the year. €4.2bn 2016 proceeds

REALISATION REALISATION GROSS COMPANY FUND SECTOR DATE TYPE TRANSACTION OVERVIEW MULTIPLE

December Partially realised –– Sale of 35% of shares to Hillhouse Capital, Not P5 2016 a global investment management firm with Disclosed a strong presence in Asia Carve-out of eBay’s open –– 59% stake (on an undiluted basis) retained source and enterprise by the fund e-commerce platform

March 2017 Partially realised –– Proceeds received from Stock Exchange Not P4 IPO –– 21% stake in the company retained Disclosed

A market-leading 'Kaiten' sushi restaurant chain operator in Japan

May 2016/ Partially realised –– Partial exit to Silverlake Partners, GIC and P4 October 2016 Spectrum Equity 3.1x A provider of online –– 7% stake in the business retained by the fund genealogy –– Further proceeds received following a refinancing in October 2016

December Fully realised –– 5.5 million common shares of Platform sold, fully P4 2016 Trade sale realising the investment in December 2016 1.6x

Global crop protection specialist

April Fully realised –– Sale to TE Connectivity, a US-headquartered P4 2016 Trade sale corporate buyer 3.3x

Supplier of minimally invasive surgical delivery devices

March/June/ Fully realised –– Disposal, by three block trades, of the fund’s P4 July 2016 Trade sale remaining shares in NXP, fully realising 1.1x the investment

A global leader in embedded processing solutions PERMIRA ANNUAL REVIEW 2016 9 BUYING & SELLING WELL WHO WE ARE WE WHO 1. SELLING WELL & BUYING 2.

REALISATION REALISATION GROSS COMPANY FUND SECTOR DATE TYPE TRANSACTION OVERVIEW MULTIPLE

September/ Partially realised –– Partial sale to Hellman & Friedman in Not P4 December September 2016 Disclosed

2016 –– Further proceeds generated in December 2016 DRIVE GROWTH PARTNERING TO 3. A global leader in contact through full redemption of the preferred equity centre software security, following the acquisition of Interactive Intelligence and concurrent refinancing –– 22% equity stake in the combined entity retained by the fund

August 2016 Fully realised –– Sale to Honeywell, a US-headquartered P4 Trade sale corporate buyer 5.2x A provider of high-speed automated material SECTOR FOCUS 4. handling solutions

April 2016 Fully realised –– Disposal of the fund’s remaining shares PE3 IPO in Saga, fully realising the investment 1.6x

A leading UK provider of products and services to the over 50s PDM 5. December Fully realised –– Sale to CVC Capital Partners PE3 2016 Secondary 0.1x

An Italian gaming operator

May 2017 Fully realised –– Proceeds received following listing PE3 IPO on the Madrid Stock Exchange 0.4x

A Spanish home delivery RESPONSIBLY INVESTING 6. pizza business CONTACT US 7.

10

TECHNOLOGY

COUNTRY: US | ACQUIRED: 2015 | PARTIAL EXIT: 2017

Magento is a leading provider of omnichannel commerce solutions to retailers, brands and branded manufacturers across retail B2C and B2B industries.

THE INVESTMENT STRATEGY To enhance Magento’s go-to- the changing needs of global market strategy and continue wholesalers, manufacturers Magento’s product leadership and retailers To invest in Magento’s Retail To bolster growth and market Innovations and omnichannel position, where needed, capabilities in order to meet through strategic acquisitions

MILESTONES TO DATE Significant carve-out from Supported the acquisitions former parent eBay completed of Schopial (social commerce with minimal distraction business that helps merchants allowing management to focus sell products on platforms on the value creation plan including Facebook), RJ Metrics (analytics software provider for Built-out core management e-commerce companies) and team: SVP Strategy & Growth, Bluefoot CMS (a set of tools VP of Global Sales, CIO, Head that will facilitate the Magento of Strategy, Senior Director page building process) of Payments Introduced a strategic Developing stand-alone investor, Hillhouse Capital, systems and services which recently invested Organic and inorganic $250 million in the business initiatives in progress, including pricing optimisation and improved ecosystem monetisation

#1 250k $50bn E-commerce Websites Gross platform merchandise volume

See more on our sectors p17 PERMIRA ANNUAL REVIEW 2016 11 PARTNERING TO DRIVE GROWTH 3 ARE WE WHO 1. PARTNERING TO DRIVE GROWTH SELLING WELL & BUYING 2.

SECTION 3 DRIVE GROWTH PARTNERING TO 3. PARTNERING TO DRIVE GROWTH Magento case study 10 Partnering to drive growth 12 Portfolio group team 15

SECTOR FOCUS 4. PDM 5. RESPONSIBLY INVESTING 6. CONTACT US 7.

12

Partnering to drive growth The Portfolio group is a dedicated team with diverse operational backgrounds that provides specific functional expertise to help management teams build better, stronger businesses.

Supporting management teams We value and promote transparency – it is One important area of focus for us is to create value fundamental to forming and executing the Environmental, Social and Governance plan. Frank, open and frequent dialogue (‘ESG’). Adinah Shackleton (Head of ESG) We first get involved in the due diligence with the management teams is critical. This helps to ensure that ESG matters are phase, long before the funds make an allows us to get the information that we need considered at every stage of the process, investment. That's when we work to uncover quickly, to identify and resolve issues and to and that good practice in this area helps the quality of the business and build a value support the people who are responsible for to drive operational efficiencies. creation plan designed to unleash maximum the various initiatives. potential. Assuming our funds go on to make In addition to our experienced, global team, the investment, our role then is to support we have access to an extensive network of A growing team of experts management teams to implement and senior advisers and consultants across all execute on the plan to drive sustainable We are a relatively small group built around five sectors, some of whom sit on the board growth across the company. the Permira funds' investment strategy and of a number of the funds' portfolio companies. the practical needs of portfolio company This could mean working closely with them It is our job to ensure that the plan is embedded management teams. We have built a team during the initial set-up process at a portfolio in the company with as little disruption as possible. that reflects these priorities and mirrors the company, or simply recommending them This is a crucial inflexion point in their growth wider firm structure, with 10 individuals in key to a management team member. journey and can be unsettling. We support geographies, sectors and functional areas management teams to set out a trajectory, get to proactively add value to the businesses the right reporting and processes in place, and we back. create the momentum for growth, providing a roadmap. It is then down to the management team to drive the plan forward.

Frank, open and frequent dialogue with the management teams is critical. This allows us to get the information that we need quickly, to identify and resolve issues and to support the people who are responsible for the various initiatives.

OLIVER STEIL PARTNER, HEAD OF PORTFOLIO GROUP OLIVER STEIL PARTNER, HEAD OF PORTFOLIO GROUP PERMIRA ANNUAL REVIEW 2016 13 PARTNERING TO DRIVE GROWTH WHO WE ARE WE WHO 1. SELLING WELL & BUYING 2.

We have made significant progress over the back Magento – it was a wonderful software The Portfolio group also played a key role past 18 months recruiting the right blend business with a massive customer base and in supporting the management team to of skills and experience for Permira and leading positions in Europe and the US. But create value at Vacalians Group (P5, 2015), formalising the process. eBay was looking to sell a number of other a leading European player in outdoor holidays. companies that didn’t fit our profile and we We formed an investment thesis based on The Portfolio group in action thus spent a lot of time engineering a team- an attractive underlying market with resilient DRIVE GROWTH PARTNERING TO 3. up to allow the Permira funds to only acquire growth. The plan sought to upgrade the overall The Portfolio group has helped to create what we wanted, including getting the assets customer experience and introduce a premium strategic value at every stage of the process, that became Pepperjam. Time was tight, range with additional services. Following a from due diligence to the 100-day value we had only a few weeks to carry our due successful trial, this coming season will see the creation plan and in major strategic projects diligence and structure the entire enterprise roll-out of high-end vacation offerings across throughout the lifetime of the investment. – an extremely complex process involving a number of target destinations. A great example of how our work at an early separating multiple businesses from a division

stage in a transaction can enable management that was itself about to be carved out of Knowledge sharing SECTOR FOCUS 4. to focus on running the company is Magento eBay. Crucially, we went through this process We also facilitate best practice sharing (P5, 2015), an omnichannel commerce without heavily burdening CEO Mark Lavelle, through a series of portfolio conferences. solutions provider. Our Technology team to give him the capacity to continue with his These allow for knowledge-sharing among had been building a relationship with eBay own challenge of running the business. the senior team members from specific for some time and tracked the ownership of functional areas who are invited to hear Magento for years. We knew we wanted to about the latest developments in their field, and to share expertise. PDM 5.

How we operate Permira operates a matrix structure where sector teams, our local office network and functional specialists collaborate seamlessly across our global platform.

SECTOR RESPONSIBLY INVESTING 6. TEAMS 3 CONTINENTS

OFFICE PORTFOLIO INDUSTRY NETWORK GROUP INSIGHTS CONTACT US 7. 14 OFFICES FINANCE LEGAL STRUCTURE INTERNAL EXPERTS 14

Partnering to drive growth continued

Systemising the Permira approach – Refined approach to repeatable value creation The Permira approach is founded upon five core value creation topics, each of which is underpinned by multiple initiatives. Each value creation plan is designed and tailored to suit the specific portfolio company situation.

2010STRATEGY 2010MARKETING 2011 SALES2012 EFFICIENT2015 Formal ESG2.0 PermiraEXCELLENCE ESG Permira RAMP-UPPermira OPERATIONSPermira hired framework launched Group established adopted won BVCA first Head of Add-on acquisitions Brand & value propositionPrinciples forDirect sales excellenceResponsible FootprintESG, optimisation Adinah Responsible Investment Shackleton Transformational M&A New product roadmap Wholesale distributor/ Lean production Investment dealer managementAward International expansion Pricing & packaging Supply chain Retail roll-out management E-commerce step-up Digital marketing Retail LfL initiatives Service delivery Use of big data optimisation Engineering-to-sales CLTV management Overhead cost reduction

Customer experience management

PLATFORM CREATION

Corporate carve-out Management upgrade Reporting & incentives

Post merger integration Employee engagement IT/ERP system scale-up PERMIRA ANNUAL REVIEW 2016 15 PARTNERING TO DRIVE GROWTH

Portfolio group team ARE WE WHO 1. SELLING WELL & BUYING 2. DRIVE GROWTH PARTNERING TO 3.

RICCARDO BASILE ZILIA D’MELLO DOMINIQUE FRIEDRICH ELISABETTA FRONTINI RAJ KAPOOR LONDON MILAN MENLO PARK

Specialisms: Expertise in Specialisms: iLevel, portfolio Specialisms: Functional Specialisms: Broad functional Specialisms: Marketing designing and executing carve- monitoring and reporting focus on strategy, business experience: marketing, sales, and sales out and post-merger integration Reporting and accounting model innovation, product product development, strategy, MBA from Harvard Business Masters degree from background management and go-to-market retail, service operations, M&A School SECTOR FOCUS 4. University of Bologna, Italy strategies, commercial excellence, Economics background Member of the Chartered organisation and PMI 3 years at SquareTrade Chartered Engineer Institute of Management MBA from Stanford Executive 's Accountants PhD in Economics from Early career in industry in Italy, University of Eichstätt-Ingolstadt 8 years of consulting at Portfolio Group UK, Russia 1 year with Langham Hall LLP McKinsey; 1 year as a Partner International business 5 years at PwC UK 2 years with Living Bridge LLP background Senior executive in FMCG, at Ferrero Group 5 years at AlixPartners >9 years consulting at BCG 3 years as Head of Programme Management Office and member of top executive team at PDM 5. Douglas Holding RESPONSIBLY INVESTING 6.

RAZ KHAN SHANE LAUF CHRISTIAN PAUL ADINAH SHACKLETON OLIVER STEIL NEW YORK HONG KONG LONDON LONDON LONDON

Specialisms: Operations, Supply Specialisms: Consumer, Specialisms: Broad functional Specialisms: Environmental, Specialisms: Hands-on Chain, Six Sigma Healthcare, Technology, Asia experience: new market entry/ Social and Governance experience in most business Bachelor and masters degree Computer Engineering product launch, sales growth, Geography degree from UCL functions; from recovery pricing, supply chain situations to strategic from Alfred University background 8 years at sustainability CONTACT US 7. growth projects 3 years Tyco International MBA/MS from Stanford Degree from University of consultancy, ERM Alabama-Birmingham, MBA Electrical Engineering Diploma 8 years at Cerberus Capital 5 years at KKR Capstone from Oxford University 1 year in construction as an from Ruhr University of Bochum Management environmental coordinator 5 years at McKinsey 12 years at Roland Berger and 10 years at McKinsey, 3 years AlixPartners as a Partner 12 years of work experience CCO and CEO at debitel AG in Asia CEO of Sunrise 5 years with Permira in Communications AG Hong Kong 16

CONSUMER TECHNOLOGY

COUNTRY: POLAND | ACQUIRED: 2017

Allegro Group is Poland’s largest online marketplace, with more than 20 million registered users allowing businesses and individuals to sell their products to consumers. In addition, the Group operates Ceneo, Poland’s leading online price comparison website.

WHY WE BACKED THEM To back an iconic brand with To capitalise on the exceptional user engagement secular growth of the metrics Polish e-commerce market, which is expected to double To support a management in the next five years team with proven execution track record of delivering growth

THE INVESTMENT STRATEGY To build a stronger ecosystem, To invest in the end-to-end giving both customers and customer experience from merchants more reasons to integrated logistics to use the website customer service and returns To improve the website user experience across desktop and mobile to drive improved conversion rates

Permira provides us with unrivalled expertise in growing e-commerce and technology businesses in emerging Europe. We are delighted to have attracted their financial backing and operational insights going forward, as well as their investment commitment to the business to considerably enhance our customers’ experience.

PRZEMYSLAW BUDKOWSKI, ALLEGRO, CEO

€3.1bn 20m #1 Transaction Registered Polish internet value users brand

See more on our sectors p17 PERMIRA ANNUAL REVIEW 2016 17 SECTOR FOCUS 4 ARE WE WHO 1. SECTOR FOCUS SELLING WELL & BUYING 2. DRIVE GROWTH PARTNERING TO 3.

SECTION 4 SECTOR FOCUS 4. SECTOR FOCUS Allegro case study 16 Consumer 18 Financial Services 22 Healthcare 26 Industrials 30 Technology 34 PDM 5. RESPONSIBLY INVESTING 6. CONTACT US 7.

18

SECTOR FOCUS CONSUMER

TECHNOLOGY

Two interconnected and disruptive trends are reshaping the Consumer sector. The first is the emergence of a new generation of consumers who are far more focused on experiences than material possessions. Overlaying this is the use of technology, which is forcing companies to reassess all aspects of their businesses. Coupled together, these trends are driving a pace of change more rapidly than at any stage in the Permira funds’ 30+ year investment history.

CHERYL POTTER PARTNER, HEAD OF CONSUMER PERMIRA ANNUAL REVIEW 2016 19 SECTOR FOCUS WHO WE ARE WE WHO 1.

30 €8.3bn €5.0bn Investments1 Equity invested1 Total current sales1 SELLING WELL & BUYING 2.

'Doing stuff not buying stuff' In terms of changing consumer habits, there is a major shift towards experiences rather In a world where buying decisions are than material purchases. This is happening informed by so many disparate sources at both ends of the age spectrum: baby- and the consumer has unlimited choice DRIVE GROWTH PARTNERING TO 3. boomers have gone past the ‘stuff at their fingertips, having the right accumulation’ phase and are investing product is more important than ever. much more in travel and experiences. At the other end, millennials don’t attribute CHERYL POTTER

the same value to ownership, and are PARTNER, HEAD OF CONSUMER spending a far greater proportion of their disposable income on unique experiences

and bespoke brands. SECTOR FOCUS 4. We now spend much more of our time Market disruption thinking about how these trends will play Technology is accelerating and accentuating out in the long-term. For everyone, spending changes in consumer behaviour. Historically, time with friends and family is highly companies have done everything they can to valued. This has driven strong growth in protect their brands by exerting tight control the casual dining market. Sushiro Global over all touchpoints with their customers. Holdings Ltd (P4, 2012) is a sushi restaurant New technology and new channels have

chain operator in Japan. We worked with PDM 5. changed that. management to expand the successful concept, growing its store presence from The online ‘review culture’, where consumers 335 outlets to 450+, prior to its listing on consult people they’ve never met before as the Tokyo Stock Exchange in early 2017. a matter of course to supplement brand-led content. Combined with the rapid growth of John Masters Organics (P5, 2016) is a popular culture ‘influencers’ on platforms like premium organic skin, hair and homecare YouTube and Instagram which are increasingly brand. The company started life in a salon intermediating brand messages. in Soho, NYC and then licensed products RESPONSIBLY INVESTING 6. to Japan. It is part of our thesis to reunite In a world where buying decisions are informed the licence and the brand into one business by so many disparate sources and the consumer behind a strong management team to has unlimited choice at their fingertips, having deliver a global growth agenda. To address the right product is more important than ever. this complexity we put together a team At Dr. Martens (P5, 2016), the iconic British with huge consumer experience across all shoemaker, management has sought to build the relevant markets in Japan, the US and engagement with customers by building new Europe to support the management team. stores, staging pop-up gigs and producing CONTACT US 7.

more editorial. The company encourages

customers to share their experiences and style tips because it believes in the product and recognises that happy customers are the best brand ambassadors.

1 As at 31 March 2017. 20

SECTOR FOCUS CONSUMER CONTINUED

Backing tomorrow’s winners We have a 30-year investment track record backing brands like Hugo Boss, Valentino and The breadth of previous success stories gives us an unparalleled view on the complex Homebase. We have helped these, and many themes reshaping the Consumer sector. In a world where capital for successful businesses others, develop online and mobile strategies, has largely become commoditised, having this bank of success stories and institutional roll out new stores and develop products and knowledge is critically important. We believe the funds' track record and global network services. And we have done this around the of Permira professionals and relationships is a clear USP for businesses looking to expand world and through multiple economic cycles. in a complex and rapidly changing market. Over the period 2000-2015, the only institution that has invested more in CHERYL POTTER PARTNER, HEAD OF CONSUMER consumer brands is French luxury goods company, LVMH.1

BUYING WELL Selected current portfolio

Akindo Sushiro Allegro Group Atrium Innovations BFY Brands

Acquisition year 2012 Acquisition year 2017 Acquisition year 2014 Acquisition year 2015

Transaction value N/A Transaction value €3,068m Transaction value €754m Transaction value N/A

Country Japan Country Poland Country Canada Country US akindo-sushiro.co.jp allegro.pl atrium-innovations.com ourlittlerebellion.com ceneo.pl

Dr. Martens John Masters Organics S&B Vacalians

Acquisition year 2014 Acquisition year 2016 Acquisition year 2017 Acquisition year 2015

Transaction value €380m Transaction value N/A Transaction value €730m Transaction value N/A

Country UK Country US/Japan Country Germany Country France drmartens.com johnmasters.com schustermann-borenstein.de vacalians-group.com

1 Bloomberg LP and Bernstein analysis. Note: Includes Bloomberg LP. categories: apparel manufacturers, footwear and related apparel, retail apparel store/shoe, retail – jewellery and textile apparel. PERMIRA ANNUAL REVIEW 2016 21 SECTOR FOCUS

CASE STUDY ARE WE WHO 1.

c.150 COUNTRY: ITALY ACQUIRED: Fully owned 2016 stores SELLING WELL & BUYING 2. Arcaplanet is a leading pet WHY WE BACKED THEM THE INVESTMENT STRATEGY care retail chain in Italy. To help capitalise on the retail To consolidate within this Through its network of 152 chain expansion in the resilient fragmented market through Italian pet care market a combination of new store directly operated stores roll-outs and potential add-on To consolidate the fragmented (“DOS”), the company offers acquisitions Italian market starting from its a large and diverse product existing strong leading position To enhance operational range (pet food, accessories, (c.150 fully owned stores) efficiencies through the growth 35% health and grooming) of niche of its private label, improved To expand abroad and premium brands as well sourcing, CRM optimisation Market share DRIVE GROWTH PARTNERING TO 3. as its own pet food label. To back a strong management and enhanced category team led by the CEO/founder management on chains

SELLING WELL SECTOR FOCUS 4. Selected past investments PDM 5. Ferretti Galaxy Entertainment Homebase Hugo Boss

Exit year 2007 Exit year 2012 Exit year 2002 Exit year 2015

Gross Multiple 2.3x Gross Multiple 2.8x Gross Multiple 6.1x Gross Multiple 2.3x

Country Italy Country Hong Kong Country UK Country Germany ferrettigroup.com galaxyentertainment.com homebase.com hugoboss.com RESPONSIBLY INVESTING 6. CONTACT US 7.

Iglo New Look Takko ModeMarkt Valentino

Exit year 2015 Exit year 2015 Exit year 2007 Exit year 2007

Gross Multiple 2.3x Gross Multiple 4.4x Gross Multiple 2.5x Gross Multiple N/A

Country UK Country UK Country Germany Country Italy iglo.com newlook.co.uk takko-fashion.com valentino.com 22

SECTOR FOCUS FINANCIAL SERVICES

In the aftermath of the financial crisis and as a result of the rise of the internet, the financial services industry has been changing rapidly. As banks rebuild their capital reserves and divest non-core activities, a strong flow of sizeable and attractive investment opportunities are emerging in a number of sub-sectors.

Market disruption The 2008 financial crisis still casts a shadow across the financial services industry. Banks continue to retrench from their pre-crash roles as financial conglomerates to focus chiefly on retail, corporate and , and unwinding their positions in services such as , consumer lending, wealth and asset management, and many others. As part of this shake-out, we are witnessing far more outsourcing of bank functions such as IT, fulfilment and receivables collection that had historically been kept in-house, and we expect this trend to continue. PHILIP MUELDER In short, after nearly 10 years, we are yet to PARTNER, CO-HEAD OF arrive at a ‘new normal’ in financial services. FINANCIAL SERVICES, Many of the large banks have still not gone HEAD OF LONDON through the necessary structural changes. As this process unfolds in the years to come, we will continue to witness a steady stream of opportunities across our core sub-sectors: wealth management, specialty insurance, specialist finance and fintech.

Our approach in action What we are seeing time and time again are good businesses that have been starved of investment and under-managed since the financial crisis. Management teams in these businesses are frustrated because critical business decisions have been taken out of their hands by people further up the bank and have little commercial relevance for the business they are trying to build. PERMIRA ANNUAL REVIEW 2016 23 SECTOR FOCUS WHO WE ARE WE WHO 1.

7 €2.7bn €3.9bn Investments1 Equity invested1 Current sales1 SELLING WELL & BUYING 2.

While the opportunity set is huge, getting to these businesses and understanding the complexities of carving them out of very Permira’s combination of Financial large banking conglomerates is a far greater Services and Technology expertise

challenge requiring in-depth execution skills DRIVE GROWTH PARTNERING TO 3. and market knowledge. has proved a real advantage helping businesses establish the platform they A good example is Tilney Group (P5, 2014), need to compete and grow. a financial planning, wealth management and investment company that we backed JAMES FRASER after a two-year courtship with Deutsche PARTNER, CO-HEAD OF Bank. The separation allowed the business FINANCIAL SERVICES to develop and deliver its own strategy

without being constrained by the politics SECTOR FOCUS 4. of sitting within a larger organisation. Part of the investment thesis was to consolidate this fragmented industry, and the funds have subsequently backed the business through a series of acquisitions, including the transformational acquisition of Towry in 2016. At a time when added levels of compliance are

required and capital constraints have curtailed PDM 5. banks’ ability to invest in new technologies, Permira’s combination of Financial Services and Technology expertise has proved a real JAMES FRASER PARTNER, advantage helping businesses establish the CO-HEAD OF platform they need to compete and grow. FINANCIAL SERVICES Take Tricor (P5, 2016) (a first in Asia for the Financial Services team), a corporate services provider carved out from The Bank of East Asia. Together with our Technology team, we RESPONSIBLY INVESTING 6. developed an investment thesis based on the application of technology to drive automation and expand the product range and quality of service provided to customers. CONTACT US 7.

1 As at 31 March 2017. Includes Tricor which completed in April 2017 and Alter Domus which completed in May 2017. 24

SECTOR FOCUS FINANCIAL SERVICES CONTINUED

Partnering for growth UK and applied it to the German market to enable a successful merger between GFKL As a specialist in Financial Services, with and Lowell Group in 2015 and the groups’ a global network, Permira is well placed As the financial services industry moves subsequent acquisitions of Tesch Inkasso to identify those businesses within larger and IS Inkasso Service in 2016. away from financial conglomerates or conglomerates with long-term growth and an integrated bancassurance model, transformation potential. Crucially we are a trusted partner in a sector we like to back independent, challenger where sensitivities around reputational issues Our capacity to leverage this global network businesses who are more focused and frequently arise. The complexity of these is especially important in an industry where deliver superior products and services. situations and a lack of transparency mean legislation and regulatory oversight operates that fewer of these opportunities emerge in at a very local level. For example, the UK PHILIP MUELDER wide auctions, so having the relationships PARTNER, CO-HEAD OF FINANCIAL debt purchase market is one of the most and the credibility to deliver in complex highly SERVICES, HEAD OF LONDON sophisticated yet domestic of all financial regulated situations is critical. services markets. We harnessed our insights and understanding of best practice in the

BUYING WELL Selected current portfolio

Alter Domus JRP Group Lowell

Acquisition year 2016 Acquisition year 2009 Acquisition year 2015

Country Luxembourg Country UK Country Germany & UK alterdomus.com wearejust.co.uk lowellgroup.co.uk

Tilney Group Tricor

Acquisition year 2014 Acquisition year 2017

Country UK Country Hong Kong tilney.co.uk hk.tricorglobal.com PERMIRA ANNUAL REVIEW 2016 25 SECTOR FOCUS

CASE STUDY ARE WE WHO 1.

€700m ACQUISITION YEAR: 2017 Transaction COUNTRY: HONG KONG value SELLING WELL & BUYING 2. Tricor is a leading provider of WHY WE BACKED THEM THE INVESTMENT STRATEGY integrated business, corporate To back a leading provider To drive growth through service and investor services in Asia in outsourced corporate services optimisation and enhanced and a premium brand in IT automation Pacific. Find out how we are the industry supporting its growth plans in To strengthen the regional To benefit from strong structural sales force Asia and beyond… market dynamics which is To consolidate a highly growing at 8–10% p.a. fragmented market 2,000 To support a truly differentiated business which has built a unique Employees DRIVE GROWTH PARTNERING TO 3. position in the investor services and share registry market in Hong Kong

SELLING WELL SECTOR FOCUS 4. Selected past investments PDM 5. The AA Saga (Acromas)

Exit year 2014 Exit year 2016

Gross Multiple 3.7x Gross Multiple 1.6x

Country UK Country UK theaa.com corporate.saga.co.uk RESPONSIBLY INVESTING 6. CONTACT US 7.

26

SECTOR FOCUS HEALTHCARE

In such a complex sector, identifying the most interesting investment opportunities and helping the Permira funds’ portfolio companies grow involves building a team with the experience and credibility to work simultaneously across multiple disciplines including science, medicine, regulation, commercial and financial ideas.

MUBASHER SHEIKH PARTNER, HEAD OF HEALTHCARE PERMIRA ANNUAL REVIEW 2016 27 SECTOR FOCUS WHO WE ARE WE WHO 1.

10+ c.€900m 2.8x Investments1 Equity Gross realised invested1 returns SELLING WELL & BUYING 2.

Identifying growth potential in a Another interesting theme that we are complex marketplace following is long-term structural growth in the pet-care market as ownership of companion The healthcare sector is vast and constantly This team has the knowledge and animals grows around the world and families in flux so we don’t limit our approach to experience to work across multiple

lavish more time and money on their pets. DRIVE GROWTH PARTNERING TO 3. two or three sub-sectors. As the youngest of sub-sectors and hold conversations the five sector teams at Permira, we look at with the scientists and clinicians. Because of our track record in this sub- things slightly differently. We take a view on sector, we continue to be a proud sponsor the whole sector and dig deep into themes MUBASHER SHEIKH of the Animal Health Forum in London and that in our view have investment potential. PARTNER, HEAD OF HEALTHCARE Shanghai this year.

At one level, everybody can recite the four or five major global healthcare trends, but for European player of any scale in the space. Pharmaceuticals us it is only when you peel back the layers This led to the formation of the Pantheon Another recent area of focus has been

and uncover parts of that ecosystem that SECTOR FOCUS 4. Group, one of the emerging leaders and a pharmaceuticals. Intense price pressure that things become interesting from an platform to consolidate this fragmented has led to a wave of M&A among the big investment standpoint. European market. To date, we have supported players, while simultaneously we have seen In order to pursue this strategy effectively, the business to make 13 acquisitions, the quite rapid growth of biotech players to we knew from the start we would need to creating a group that provides a more rival big pharma. combine investment expertise and financial efficient and cost effective service to This led us to interesting potential acumen with the ability to talk credibly to hospitals and helps take costs out of opportunities in highly specialised outsourced scientists and clinicians on their own terms. shrinking healthcare budgets. manufacturing. We looked at the new breed

So we built a diverse group that is weighted PDM 5. of ‘garage band’ biotech firms that are towards clinical expertise, including a Animal health focused on developing the next generation transplant physician, a physician and a Another ongoing focus is animal health, of complex antibodies. The scientific work former leader from Novartis, to name a few. an area that has yielded interesting being done at this level is very exciting, but This team has the knowledge and experience opportunities. these venture-backed biotech firms want to work across multiple sub-sectors and hold The top-level trend is population growth and to concentrate on research and outsource conversations with the scientists and clinicians rising disposable incomes, which in turn has as much of the manufacturing as possible. five levels down and develop a bespoke value led to increasing consumption of meat and This process eventually saw us back creation plan for every partnership. fish. This has driven up productivity demands Lyophilization Services of New England, Inc RESPONSIBLY INVESTING 6. on animal farming, an industry that is already (“LSNE”) (P6, 2017), a contract development Our approach in action struggling to sustain growth with finite and manufacturing organisation for the pharmaceutical and medical devices markets. A good example of this approach is Pantheon environmental resource and space. (P5, 2014), a provider of end-to-end products In light of this trend, we backed Pharmaq (P4, With a focus on clinical trial and small/ and services for diagnostic imaging and 2012), a leading fish vaccines manufacturer, medium commercial volumes, LSNE operates biomedical equipment. The top-level trend on the growth thesis: that fish farming in a market benefiting from growth in is the runaway costs of healthcare across (currently accounting for about half of fish biologic medicines and a shift to more nearly all markets. We looked down the complex molecules, as well as from increased CONTACT US 7. production worldwide) would continue to chain at areas where costs could be taken grow over time.. During the partnership, we outsourcing from biotech and pharmaceutical out, and recognised the maintenance of supported the company’s growth across companies. With a highly qualified team and critical machines in hospitals was one such new species, new immunologies and new a flexible customer approach, LSNE is ideally area. These machines are very expensive, geographies. At exit, the business had placed to address some of the most complex get mistreated and need to be recalibrated successfully grown into a clear world leader in formulations in the pharmaceutical space. regularly. Unlike in the US, there was no the fish vaccine industry.

1 A s at 31 March 2017. Includes LSNE which completed in April 2017. 28

SECTOR FOCUS HEALTHCARE CONTINUED

Where next? Elsewhere, China will be interesting in the years to come as high-quality biological This creative investment approach is paying research continues to shift eastward. dividends in the quality of the pipeline we are Over the last couple of years we Japan has the largest elderly population in seeing. Over the last couple of years we have a concentrated space anywhere in the world have applied this approach more applied this approach more systematically and we are increasingly seeing interesting systematically to the US market, where to the US market, where we now have a opportunities. As one of the few global funds we now have a dedicated group of dedicated group of investment professionals in an underpenetrated Japanese market, investment professionals supporting our supporting our global healthcare franchise. we are well positioned to take advantage global healthcare franchise. We have already found that the sheer size of these trends in the years to come. and depth of the market in the US is creating MUBASHER SHEIKH lots of opportunities for us, as demonstrated PARTNER, HEAD OF HEALTHCARE with our recent investment in LSNE.

BUYING WELL Selected current portfolio

LSNE Pantheon Healthcare

Acquisition year 2017 Acquisition year 2014

Transaction size N/A Transaction value €161m

Country US Country UK/Switzerland lyophilization.com pantheonhg.com PERMIRA ANNUAL REVIEW 2016 29 SECTOR FOCUS

CASE STUDY ARE WE WHO 1.

20 years ACQUISITION YEAR: 2017 Quality regulatory COUNTRY: US history SELLING WELL & BUYING 2. LSNE is a leading contract WHY WE BACKED THEM THE INVESTMENT STRATEGY development and manufacturing To back a leader in an attractive To vertically integrate into the organisation specialising in sterile niche with key competitive attractive active pharmaceutical advantages ingredients (“API”) category lyophilization and fill & finish of drugs and devices, serving a To support a strong management To broaden the manufacturing team in a rapidly growing market footprint across geographies range of pharmaceutical, biotech which is predicted to grow 7–9% p.a. and medical device customers. To expand capacity to To benefit from a market enable further commercial- 7–9% p.a that has high barriers to entry level contracts and extend given requirements of technical capabilities to better serve Growth of DRIVE GROWTH PARTNERING TO 3. expertise, regulatory track both US and European market record and capital investment commercial customers

SELLING WELL SECTOR FOCUS 4. Selected past investments PDM 5. Creganna Medical Pharmaq Rodenstock

Exit year 2016 Exit year 2015 Exit year 2007

Gross Multiple 3.3x Gross Multiple 3.3x Gross Multiple 4.3x

Country Ireland Country Norway Country Germany cregannatactx.com pharmaq.com rodenstock.com RESPONSIBLY INVESTING 6. CONTACT US 7.

30

SECTOR FOCUS INDUSTRIALS

TECHNOLOGY

The industrial landscape is obviously huge and Technology Decreasing cost, miniaturisation, wireless diverse – so we look for companies that play technology and the primacy of software are transforming the sector. Technology into three growth themes: the adoption of has become pervasive and interconnected technology, the incorporation of services and through the whole value chain in most industrial businesses. For example, the the emergence of ‘winning’ global platforms. ubiquity of low-cost sensors creates a need for software that can make sense of the massive amount of data being generated and provide an array of aftermarket solutions that in turn impact the interface with customers. Maximising the benefit of technology at each stage in the value chain is critical and almost always a key part of how Permira helps management drive value. We look for businesses where we can combine our 30+ year experience in the Industrials sector with our Technology expertise to help increase efficiency and productivity, drive down costs and ultimately help them grow.

Technology has become pervasive and RICHARD CAREY interconnected through the whole value PARTNER, chain in most industrial businesses. CO-HEAD OF INDUSTRIALS RICHARD CAREY PARTNER, CO-HEAD OF INDUSTRIALS PERMIRA ANNUAL REVIEW 2016 31 SECTOR FOCUS WHO WE ARE WE WHO 1.

20+ €4.4bn €1.8bn Investments1 Equity invested1 Total current sales1 SELLING WELL & BUYING 2.

In the e-commerce, fulfilment business, Services In almost all of the funds' portfolio Intelligrated (P4, 2012–2016) is a good example. companies, it is becoming increasingly The incorporation and growth of services Our understanding of software and a clear difficult to turn up and simply sell a product. in industrial businesses is another key area roadmap for how it should be incorporated into Customers are demanding a full solution for of focus, both from an origination point

the business was a key factor in persuading the the lifetime of their investment and everyone DRIVE GROWTH PARTNERING TO 3. of view and as a value creation tool during founders to partner with the Permira funds from is trying to provide it for the whole customer ownership. Maximising the potential the outset. journey. Across the funds’ portfolio we are of ongoing services is vital in two ways: seeing the service element account for a During the investment period, the management it enables you to get closer to your much larger share of revenues. team put this vision into action, increasing yearly customers and it gives you a transparent

R&D spend from $6 million to $27 million to stream of repeatable revenue. The growth In the case of BakerCorp (P4, 2011), a largely build a software platform that met the growth in aftermarket services is, in many cases, US-based industrial services company, it has ambitions. We partnered with management enabled by the integration of the types of led the field in the integration of monitoring

to recruit a senior professional from the Permira technology discussed above, which helps technology in all of its equipment. This provides SECTOR FOCUS 4. network to lead the software charge. industrial companies to provide data and two clear advantages to the customer, enabling services that weren’t available before. them to accurately monitor exactly what is We ultimately shared the benefits of this foresight as the business doubled in size and was re-rated under the funds' ownership. PDM 5. Maximising the potential of ongoing services is vital in two ways: it enables you to get closer to your customers and it gives you a transparent stream of repeatable revenue. TORSTEN VOGT PARTNER, TORSTEN VOGT CO-HEAD OF

PARTNER, CO-HEAD OF INDUSTRIALS INDUSTRIALS RESPONSIBLY INVESTING 6. CONTACT US 7.

1 As at 31 March 2017. Includes DiversiTech which signed in April 2017. 32

SECTOR FOCUS INDUSTRIALS CONTINUED

going inside the machines and also helping While geographic expansion plays a key value While there are verticals within Industrials maximise the utility of the machines creation role in virtually all the funds' portfolio where we spend more time, we are primarily they have had at their disposal by providing companies, Netafim (P4, 2011) is a particularly driven by the opportunity to drive change a dashboard of all the availability capacity on good example of how technology and services and create value around one or more of site. For the bigger petro-chemical companies, can help build a world-beating industrial these three themes. being able to bring all this data together in one proposition. The company is an Israeli leader dashboard is a huge advantage, but it only in drip and micro-irrigation solutions, which works when you own the whole customer. played into two critical investment themes – food security and productivity. The team Global platforms had succeeded in building full-service turn-key While there are verticals within solutions for farmers, from advice on choosing In the Industrials sector, if you do something Industrials where we spend more seeds, to irrigation, fertilising, monitoring and really well in one market you are likely to be aftermarket servicing, to help them optimise time, we are primarily driven by the able to roll it out internationally. With a their land usage. With this complete solution opportunity to drive change and create global network of partners and contacts in place, we backed management to take value around one or more of these three and a 30+ year track record helping the company into new markets and expand themes. Industrials businesses grow beyond their into core geographies like China and Brazil home markets, Permira is perfectly placed to become the global number one in RICHARD CAREY to support this expansion. PARTNER, CO-HEAD OF INDUSTRIALS irrigation systems.

BUYING WELL Selected current portfolio

BakerCorp CABB DiversiTech Netafim

Acquisition year 2011 Acquisition year 2014 Acquisition year 20171 Acquisition year 2011

Transaction value €714m Transaction value €819m Transaction value N/D Transaction value €800m

Country US Country Germany Country US Country Israel bakercorp.com cabb-chemicals.com diversitech.com netafim.com

1 S ubject to completion. PERMIRA ANNUAL REVIEW 2016 33 SECTOR FOCUS

CASE STUDY ARE WE WHO 1.

160+ COUNTRY: US Product ACQUIRED: 20171 categories SELLING WELL & BUYING 2. DiversiTech is a leading WHY WE BACKED THEM THE INVESTMENT STRATEGY aftermarket manufacturer To further differentiate DiversiTech To build wallet share with existing and distributor of components as the market leader (more than customers and improve the twice the size of the next largest overall offering through product for residential and light competitor today) expansion and M&A commercial heating, To benefit from a resilient business To optimise supply chain and ventilating, air conditioning model with underlying demand distribution through procurement and refrigeration (‘HVACR’). largely driven by recurring savings and operational replacement, repair and maintenance improvements To back a strong management team To drive improved decision DRIVE GROWTH PARTNERING TO 3. that is well known to the Permira team making through enhanced (COO and CFO were former senior business intelligence capabilities, executives of Arysta LifeScience, a leveraging product and customer- former Permira IV portfolio company) level data and analytics

SELLING WELL SECTOR FOCUS 4. Selected past investments PDM 5. Aearo Technologies Arysta LifeScience Cognis Intelligrated

Exit year 2008 Exit year 2015 Exit year 2010 Exit year 2016

Gross Multiple 1.8x Gross Multiple 1.7x Gross Multiple 3.0x Gross Multiple 5.2x

Country US Country US Country Germany Country US aearo.com arystalifescience.com intelligrated.com RESPONSIBLY INVESTING 6. CONTACT US 7.

Jet Aviation Provimi

Exit year 2008 Exit year 2011

Gross Multiple 3.9x Gross Multiple 2.3x

Country Germany Country UK jetaviation.com provimi.com

1 S ubject to completion. 34

SECTOR FOCUS TECHNOLOGY

TECHNOLOGY

Permira started life as a firm Our job is to identify quality companies with and today we retain that commitment to high-growth potential in areas that others have growth as the primary driver of value creation. We were the first European buyout house that overlooked. To do this, we spend a lot of time established a presence in Silicon Valley and on top of that we have a network of senior working up theses and pulling them apart. technology specialists in all of the world's major markets. We have velocity; the funds have invested more than €8 billion in almost 40 technology companies globally and have deep relationships with many multiples of that. These attributes really help throughout the life of an investment, but even more so when we’re testing a thesis and need critical people to interrogate and develop it. When we are convinced as a group that the thesis is sound, we scour the globe for the companies that best meet the funds’ investment criteria. We then approach BRIAN RUDER management to share our thoughts on PARTNER, CO-HEAD OF TECHNOLOGY, how we can help them unlock the potential HEAD OF in their business. MENLO PARK Take Teraco (P5, 2015), a leading South African data centre company. Our team had been probing the data centre space for some time, and built a robust thesis around the particularly attractive 'carrier neutral' sub-segment. Our next step was to contact CEOs of leading companies in that segment. The CEO of Teraco appreciated that we weren’t asking for anything from him other than a chat around our genuine and researched interest in this disruptive industry. As there wasn’t an investment opportunity there to start with, the focus was solely on building a relationship PERMIRA ANNUAL REVIEW 2016 35 SECTOR FOCUS WHO WE ARE WE WHO 1.

c.40 €8.0bn €3.3bn Investments1 Equity invested1 Total current sales1 SELLING WELL & BUYING 2.

based on mutual interest. A mere three months the assets that became Pepperjam. Time Another good example of navigating through later, Teraco agreed to partner with Permira, was tight, we had only a few weeks to carry complexity is Ancestry (P4, 2012), the global despite heavy interest from strategic buyers, our due diligence and structure the entire leader in family genealogy. When we first and since then, the funds have supported enterprise – an extremely complex process started exploring the business, its nascent DNA

two-fold growth. Teraco is now the biggest involving separating multiple businesses from product was contributing virtually no revenue DRIVE GROWTH PARTNERING TO 3. data centre company on the African continent. a division that was itself about to be carved and was ignored by the market. Most people out of eBay. who looked at it thought it should have been When we decide to back a company, we do shut down. We took a contrarian view and so with high conviction. Valuations in the sector Crucially, we went through this process without saw massive potential upside in the ability can be high, but we recognise that high growth heavily burdening CEO Mark Lavelle, to give him of the DNA business to drive future revenues and the best business quality command higher the capacity to continue with his own challenge both on its own and in opening new markets prices. Oftentimes the most mispriced assets of running the business. To date, the partnership for the company’s core subscription business. are the highest quality ones – just because a has proved fruitful; commissioned research from

multiple is low doesn't mean the value is good IDC estimated that merchants on the Magento SECTOR FOCUS 4. – we have found great value time and time platform sold $101 billion in merchandise to again by paying what looked like a high price nearly 51 million shoppers in 2016, putting at the time but often looks incredibly attractive Magento at the top of global e-commerce as the business grows. platforms. It continues to successfully expand the customer base into new geographies. In Thriving on complexity January, Magento partnered with Hillhouse Capital, a global investment management firm We specialise in unearthing difficult-to-evaluate, with a strong presence in Asia, to fuel further often quirky businesses with complex ownership PDM 5. growth across the company and particularly in systems and we aim to make life simple for China. Hillhouse Capital invested $250 million management, supporting them to get on with to enable the expansion of sales, marketing the job of growing their business. It has never and client support, new product innovation and been our intention to win the volume game future acquisitions as well as marking the value in private equity and we are very happy not to of Magento at multiples of the price the Permira spend time on situations where we don’t feel funds paid for it. the underlying business fits our market views or quality bar. Instead, we aim to be a niche, high-quality growth partner looking for the RESPONSIBLY INVESTING 6. gems that others have overlooked. RICHARD SANDERS PARTNER, Take Magento (P5, 2015), an omnichannel CO-HEAD OF commerce solutions provider. Our team had TECHNOLOGY been building a relationship with eBay for some time and tracked the ownership of Magento for years. We knew we wanted to back Magento – it was a wonderful software CONTACT US 7. business with a massive customer base and leading positions in Europe and the US. But eBay was looking to sell a number of other companies that didn’t fit our profile and we thus spent a lot of time engineering a team-up to allow the Permira funds to only acquire what we wanted, including getting

1 As at 31 March 2017. 36

SECTOR FOCUS TECHNOLOGY CONTINUED

As part of the value creation plan, significant than others. Perhaps we would say that, but in technology ecosystem around the company marketing and product spend was allocated each of Healthcare IT, Consumer Technology, that creates a more user-friendly experience to the business, and at the point of partial Fintech and Edtech we have dedicated team on the site to drive traffic and conversion rates. exit it constituted the greatest share of the members that spend the vast majority of their company’s revenue growth and real scale. time on these growth sub-sectors. Many of Releasing potential The success came down to a team that had these businesses may not identify themselves as We have a very clearly defined approach to the patience, focus and expertise to understand technology companies; but on probing deeper, help grow technology businesses that has been the complexities of the company, develop many share the same characteristics. cultivated over 30 years of doing just that. We a growth thesis and see it through with complete In October, the funds backed Allegro Group use it in diligence to frame our thinking and give conviction. While the funds’ substantially exited (P6, 2017), Poland’s largest online marketplace. structure to our value creation thesis, but what the investment in 2016, P4 continues to be The company spans the Consumer-Technology we don’t do is force a management to adopt a minority investor benefiting from the upside space, meaning we have been able to combine it. We’re high touch but collaborative, valuing left in Ancestry’s continued growth. the operational know-how of our dedicated trust and delegation as a tool for growth. We’re Technology and Consumer teams to create not here to parent management through Cross-sector collaboration a growth plan that brings together the best of every small decision because we want the best We believe that we collaborate across sector each. It’s still early days, but we have already management teams to do what they do best and geographical boundaries much better begun working with management to build a and grow their businesses.

BUYING WELL Selected current portfolio

ABS Allegro Group Informatica LegalZoom

Acquisition year 2010 Acquisition year 2017 Acquisition year 2015 Acquisition year 2014

Transaction value €184m Transaction value €3,068m Transaction value €4,700m Transaction value €158m

Country Bermuda Country Poland Country US Country US absatellite.net allegro.pl informatica.com legalzoom.com ceneo.pl

Magento P&I TeamViewer Teraco

Acquisition year 2015 Acquisition year 2016 Acquisition year 2014 Acquisition year 2015

Transaction value N/D Transaction value €835m Transaction value €870m Transaction value N/D

Country US Country Germany Country Germany Country South Africa magento.com pi-ag.com teamviewer.com teraco.co.za PERMIRA ANNUAL REVIEW 2016 37 SECTOR FOCUS

CASE STUDY ARE WE WHO 1.

€1,237m COUNTRY: US PARTIAL EXIT: 2016 Transaction ACQUIRED: 2012 value SELLING WELL & BUYING 2. Genesys is a leading supplier THE INVESTMENT STRATEGY MILESTONES TO DATE of enterprise software and To help Genesys capitalise on The successful creation of solutions that enable best- the long-term trend towards a standalone business after using software and analytics a carve-out from Alcatel-Lucent in-class customer service for to provide higher-quality Completed more than 10 companies and organisations. customer service Its software provides products acquisitions which create strategic To grow the areas of analytics, extensions, cloud offerings, for call routing and handling integrated workload distribution strategic products and a presence 10,000 which integrate with all major software-as-a-service and in Latin America

contact centre hardware vendors. middle-market offerings DRIVE GROWTH PARTNERING TO 3. Completed equity recap Customers To back consolidation with Hellman & Friedman in in a fragmented market 2016 enabling the acquisition of Interactive Intelligence, a leading cloud provider

SELLING WELL SECTOR FOCUS 4. Selected past investments PDM 5. Ancestry Debitel Freescale Intelsat

Exit year 2016 Exit year 2008 Exit year 2015 Exit year 2008

Gross Multiple 3.1x Gross Multiple 3.1x Gross Multiple 1.1x Gross Multiple 9.8x

Country US Country Germany Country US Country US ancestry.com mobilcom-debitel.de freescale.com intelsat.com RESPONSIBLY INVESTING 6. CONTACT US 7.

Inmarsat NDS Premiere Renaissance Learning

Exit year 2006 Exit year 2012 Exit year 2006 Exit year 2014

Gross Multiple 3.6x Gross Multiple 2.3x Gross Multiple 4.2x Gross Multiple 4.1x

Country UK Country UK Country Germany Country US inmarsat.com nds.com renlearn.com 38

PDM

COUNTRY: UK | INVESTMENT DATE: JUNE 2016

Eaton House Schools is a collection of six independent schools based in London.

BUSINESS OVERVIEW Established in 1887, Eaton and many pupils gaining House Schools is a collection of entry to England’s leading six independent schools based academic institutions such as in London and providing high Eton College, Harrow School quality education to children and St Paul’s School from the ages of 3 to 13 The schools are based at Eaton House has a strong three prime central London academic reputation, locations: Belgravia, South achieving outstanding results Kensington and Clapham

INVESTMENT THESIS Places at Eaton House are growing London population highly sought after with all and a lack of suitable land places currently reserved up or properties to build new to and including 2020, with educational establishments a significant waiting list for Stable non-cyclical sector, school places with high barriers to entry and The market for school places a significant asset backing in London is significantly through prime central London undersupplied due to a real estate

6 930+ 3x Independent Pupils Waiting schools list exceeds capacity to 2019 PERMIRA ANNUAL REVIEW 2016 39 PDM 5 ARE WE WHO 1. PDM SELLING WELL & BUYING 2. DRIVE GROWTH PARTNERING TO 3.

SECTOR FOCUS 4.

SECTION 5 PDM 5. PDM Eaton House Group case study 38 PDM Q&A 40 ESG approach 44 CLEAN case study 45 RESPONSIBLY INVESTING 6. CONTACT US 7.

40

PDM Q&A Founded 10 years ago, Permira Debt Managers provides flexible financing solutions to mid-market businesses in Europe. Since inception in 2007, the PDM funds have provided almost €4 billion of capital to c.100 businesses in 12 European countries. We have supported companies across diverse industries from publishing, theme parks, cinemas and restaurants, to industrial gears, sofa retailers and aerospace suppliers.

The PDM funds have the flexibility to work The PDM funds invest patient, long-term with management to create bespoke financing capital from a group of blue-chip pension solutions that meet the long-term growth funds and endowments. The PDM structure The PDM structure enables the funds requirements of each individual company. enables the funds to make quick decisions and execute with certainty. to make quick decisions and execute Our current investment team benefits with certainty. significantly from the wider Permira office The investment of new debt capital in mid- network, sector expertise and relationships market companies is often fundamental THOMAS KYRIAKOUDIS with banks, lawyers, accountants and other in helping them achieve their growth objectives, CHIEF INVESTMENT OFFICER service providers to European businesses. which in turn helps drive local employment. The PDM funds' have enabled CLEAN to open Often when competing effectively for a new energy-efficient factory in Slough, it has business, it is not just about the cost of helped Paperchase open more shops on the financing. Rather we will be judged on the UK high street and it has provided Kinaxia quality of the relationship we were able to with the capital it needed to open a driver build during the process and the knowledge training academy. we bring to the table that could benefit the development of the company. THOMAS KYRIAKOUDIS This is particularly the case when working CHIEF INVESTMENT with smaller, often family-owned businesses. OFFICER Our network enables us to have conversations with senior management teams and develop financing solutions outside the usual intermediated channels. By being closer to the businesses, we are also able to form a more complete picture on the fundamentals driving the business when we are working on our due diligence. Typically, the opportunities for proprietary deals are concentrated at the smaller end of the market. However, when capital markets go through a period of weakness (e.g. during oil price fluctuations or after unexpected political developments), we are able to step in and help larger firms whose debt may suffer from temporary illiquidity. PERMIRA ANNUAL REVIEW 2016 41 PDM WHO WE ARE WE WHO 1.

c.€4.0bn c.100 12 Capital Businesses European deployed1 supported1 countries SELLING WELL & BUYING 2.

Direct lending Structured credit legacy governance and technology issues or the convoluted decision-making chains, we are The direct lending part of our business provides Our structured credit business provides long- able to get closer to businesses and provide credit solutions to mid-market European term capital to CLO managers in both the solutions that are more tailored to their needs. companies across the . We primary and secondary capital markets. This have an established track record of providing strategy relies on the excellent risk/reward DRIVE GROWTH PARTNERING TO 3. additional funding for organic and external characteristics inherent in senior secured debt, growth, in particular overseas expansion, and typically issued by larger leveraged . We are supportive of buy-and-build strategies specialise in the most junior parts of the capital (including cross-border). structure especially equity, where our credit-led We have an established track record of

approach provides the greatest differentiation. providing additional funding for organic In the last year, PDM's direct lending funds and external growth, in particular overseas have raised over €1 billion to continue backing Market evolution expansion, and are supportive of buy-and- privately owned European growth companies. build strategies (including cross-border). These are companies like Autovista, a leading In recent years, the private credit market has SECTOR FOCUS 4. German provider of data and intelligence for evolved into a meaningful asset class in its JAMES GREENWOOD the European automotive industry where we own right. There is a growing realisation CHIEF EXECUTIVE OFFICER won a sole lender mandate. In France, we again that the expansion of private credit lending used our network to establish a relationship by funds like PDM, rather than banks, is a with DGF, a supplier of products to top-end long-term, structural change rather than bakeries, where we were again the sole lender. a temporary situation stemming from the In another proprietary investment, we also financial crisis. Nearly a decade on, banks

recently backed Away Resorts, which owns and continue to retrench from their position as PDM 5. manages six holiday parks across England and long-term lenders to medium-size businesses Wales. In direct lending, these are the kind of in Europe. The coming launch of Basel IV will opportunities that are emerging across Europe only hasten this retrenchment. Private credit as both regional and domestic players, mainly businesses like PDM are filling the void left by banks, move out of the market. the banks and, because we have none of the It has also enabled the PDM funds to underwrite increasingly sizeable transactions such as

Soho House, the UK-based global private RESPONSIBLY INVESTING 6. members' club.

JAMES GREENWOOD CHIEF EXECUTIVE OFFICER CONTACT US 7.

1 As at 31 March 2017. 42

PDM Q&A continued

The private credit market is relatively A key strength of PDM is that we are an immature compared with public equities and indigenous European business, with access to debt, as well as private equity. This means offices across the continent by virtue of being A key strength of PDM is that we are an that there is still a significant amount of part of Permira. Very few of our competitors indigenous European business, with access off-market opportunity for those with the can match our presence in key markets and to offices across the continent by virtue of right connections. the resulting closeness to the companies we being part of Permira. work with. Another factor, of course, is that PDM now has a 10-year record and the investment JAMES GREENWOOD momentum from completing nearly 100 CHIEF EXECUTIVE OFFICER investments.

Selected current portfolio

ALcontrol Anaveo Aurum Autovista Away Resorts

Investment date 2016 Investment date 2015 Investment date 2015 Investment date 2017 Investment date 2017

Country Sweden Country France Country UK Country Germany Country UK uk.alcontrol.com anaveo.com aurumdesign.co.uk autovistagroup.com awayresorts.co.uk

CLEAN David Brown Delsey DGF Eaton House Systems Group of Schools

Investment date 2015 Investment date 2013 Investment date 2015 Investment date 2016 Investment date 2016

Country UK Country UK Country France Country France Country UK cleanservices.co.uk dbsantasalo.com delsey.com dgf.fr eatonhouseschools.com PERMIRA ANNUAL REVIEW 2016 43 PDM

CASE STUDY ARE WE WHO 1.

€235m INVESTMENT DATE: APRIL 2017 PCS2/3 COUNTRY: UK commitment1 SELLING WELL & BUYING 2. Founded in 1995 in London, Soho WHY WE BACKED THEM THE INVESTMENT STRATEGY House is a hospitality company Proprietary deal originated Leading position as the only truly that operates exclusive, private through PDM’s relationship global private members’ club with the Soho House Significant brand value members clubs as well as hotels, management team restaurants and spas. Core Stable and loyal membership Strong industry knowledge combined with a significant operations in major metropolitan within PDM from previous waiting list to join the clubs, cities including London, New York, investment in Soho House 65,000 Los Angeles, Miami, Chicago, providing protection and resilience PCS2 and PCS3 acted as through the economic cycle Toronto, Berlin and Istanbul. Soho sole lenders Members DRIVE GROWTH PARTNERING TO 3. House has over 65,000 members Attractive fundamentals with year- globally with a very large waiting on-year growth in memberships and revenues for over a decade list and low membership turnover. Strong asset backing in prime real estate

Selected current portfolio continued SECTOR FOCUS 4. PDM 5. Exterion Media Hillarys Blinds I@D Kinaxia Knights 1759

Investment date 2016 Investment date 2014 Investment date 2016 Investment date 2015 Investment date 2016

Country UK Country UK Country France Country UK Country UK exterionmedia.com/uk hillarys.co.uk iadfrance.fr kinaxia.co.uk knights1759.co.uk RESPONSIBLY INVESTING 6. CONTACT US 7.

Napoleon Paperchase RSK Soho House Vizrt Games

Investment date 2015 Investment date 2015 Investment date 2015 Investment date 2017 Investment date 2016

Country Belgium Country UK Country UK Country UK Country Norway napoleongames.be paperchase.co.uk rsk.co.uk sohohouse.com vizrt.com

1 £275 million underwritten by PDM funds including a £25 million unfunded commitment; £235 million provided by PCS2 and PCS3 with £40 million provided by a co-investor. Includes £25 million unfunded commitment. 44

ESG approach We believe that a focus on Environmental, Social and Governance ("ESG") is an important part of building lasting value in our funds portfolio companies. PDM is committed to ensuring that any potentially material ESG matters are taken into consideration as part of the standard investment analysis for direct lending investments.

Thinking about ESG pre-investment Material risks identified early on are Our advantage raised with the Investment Committee Material ESG matters are considered as part While we recognise that the considerations at appropriate intervals. Before we commit, of the due diligence process on each direct for a debt provider are different from a private key ESG risks are summarised for and lending investment, with responsibility for equity fund acquiring a controlling stake discussed with the Investment Committee. assessing ESG considerations on a potential in a company, the PDM deal teams are able transaction lying with the investment team. to make use of their access to Permira’s ESG Post-investment If they need to better understand the ESG network, framework and Head of ESG, risks associated with the investment, they On occasion, after we have backed a business, Adinah Shackleton. will typically be given access to relevant we engage with management teams on ESG Permira is a signatory to the UN-supported documents, speak with management teams matters, particularly if we have a Board or Principles for Responsible Investment (PRI) and may consult with external advisors. observer seat. For example, we helped Kinaxia, initiative, and this year PDM reported on a haulage firm, to develop its approach to Depending on the sponsor and the nature its activities to the PRI, as part of Permira’s reporting ESG KPIs in an effort to improve the of the investment, in some cases PDM may Transparency Report, for the first time. PDM funds commitment to initiatives. be able to rely on independent environmental, health, safety and/or social due diligence The company had grown via acquisition, undertaken for the sponsor. and wanted to implement a more consistent approach to collecting and reporting health PDM also use ‘RepRisk’, an ESG business and safety data from its various business intelligence tool, which flags up previous units, and then aggregating this at group negative ESG and reputational issues level. Kinaxia had also developed KPIs to track companies may have had. This tool can the percentage of time haulage vehicles were also be used post-investment to support running without any load; these could then in monitoring reputational risks during the be used by management teams to identify lifetime of the investment. opportunities to improve efficiency.

JAMES GREENWOOD THOMAS KYRIAKOUDIS CHIEF EXECUTIVE OFFICER CHIEF INVESTMENT OFFICER PERMIRA ANNUAL REVIEW 2016 45 PDM

CASE STUDY WHO WE ARE WE WHO 1. CLEAN CLEAN is one of the UK's leading independent laundry companies providing linen and workwear rental services. It services principally the UK hospitality sector and has a client retention rate of over 90%. The business operates in a sector with structural growth, driven by domestic and international tourism. The need for energy efficiency is driving consolidation. SELLING WELL & BUYING 2. DRIVE GROWTH PARTNERING TO 3.

SECTOR FOCUS 4. PDM 5.

The PDM funds supported CLEAN with a CLEAN has implemented a Health and €79 million investment in 2016. During the Safety initiative, STOP (Safety Total due diligence phase, the investment team Observation Process), and recently received 50% included ESG topics, such as environmental a Gold Award from the Royal Society for the liabilities, compliance, health and safety, Prevention of Accidents (RoSPA). Slough facility: and workforce/employee considerations. The new facility is likely to be the most More efficient RESPONSIBLY INVESTING 6. Post-investment PDM has continued to efficient laundry in the UK and is thought to than average engage with the business through site visits be the most advanced in the world. Average UK laundry and meetings with management to discuss gas consumption at UK laundries is 1.5 kWh/ ESG matters. kg. The new facility is currently running at The primary use of the capital was capex 0.93 kWh/kg and is targeting 0.73 kWh/kg based, enabling the company to build when at full capacity. a new, highly efficient facility in Slough. CLEAN has also been focusing on its vehicle At this facility they have invested in the best fleet efficiency, with all vehicles tracked by 30%+ available technology for energy efficiency, CONTACT US 7. GPS and onboard telematics to monitor including waste water recycling, ironer heat driver and vehicle performance. Transport CLEAN carbon recovery, high efficiency steam generation operations are accredited by FORS (Fleet footprint reduction and extensive monitoring of utility Operator Recognition Scheme) which covers since 2008 consumption to ensure the steam laundry environment health and safety. CLEAN operates in the most efficient way possible. currently has bronze level and is working towards silver. 46

CONSUMER

COUNTRY: UK | INVESTMENT DATE: JUNE 2014

Dr. Martens is an iconic British footwear brand with a rich, diverse heritage and a contemporary relevance. Read more about its approach to developing its sustainability strategy since the Permira funds' investment.

THE INVESTMENT STRATEGY To complete the transition To work on product innovation from a manufacturing and further develop Dr. Martens’ wholesaler to a modern, multi- successful product portfolio channel consumer-focused To expand its international retailer, by growing the presence and increase direct retail and e-commerce distribution control in certain distribution channels key geographies

ESG HIGHLIGHTS 70% Tier 1 footwear suppliers Formalised ESG reporting audited in 2015 and 2016 to Board 93% leather in Dr. Martens Sustainability strategy products is from leather formalised in 2016, working group gold/silver extending previous medal tanneries sustainability initiatives 20,500 Tier 1 supplier Recruited CSR manager employees covered by (onboard in 2017) Dr. Martens supplier code of conduct 2014 €380m UK Acquisition Transaction Country year value 63 800+ 1960 Countries Employees Founded sold in

See more on our sectors p17 PERMIRA ANNUAL REVIEW 2016 47 INVESTING RESPONSIBLY 6 ARE WE WHO 1. INVESTING RESPONSIBLY SELLING WELL & BUYING 2. DRIVE GROWTH PARTNERING TO 3.

SECTOR FOCUS 4. PDM 5.

SECTION 6 RESPONSIBLY INVESTING 6. INVESTING RESPONSIBLY Dr. Martens case study 46 ESG approach 48 Intelligrated case study 52 Teraco case study 53 CONTACT US 7.

48

ESG approach For the past seven years, Permira has taken a formalised approach to Environmental, Social and Governance ("ESG"), winning a number of awards during this period. ESG continues to be an increasingly important consideration for us throughout the duration of our partnership with portfolio companies, from due diligence through to exit.

Our approach is to work in collaboration with management teams to identify ESG initiatives in which they also see value. An important part of this is to demonstrate the business case.

ADINAH SHACKLETON HEAD OF ESG

ADINAH SHACKLETON HEAD OF ESG PERMIRA ANNUAL REVIEW 2016 49 INVESTING RESPONSIBLY WHO WE ARE WE WHO 1.

47,000+ €24bn Employees1 Enterprise value1 SELLING WELL & BUYING 2.

Outlining our approach to ESG Often, significant value will be created via ESG Collecting material and initiatives during the period in which we are informative ESG data During the due diligence process, our team invested. It can, however, take time to see the works on a one-on-one basis with deal teams, We have a data management system that benefits. That is why we engage with portfolio to understand the relevant risks and opportunities companies to build up their ESG management we use to collect financial and operational and how they are factoring these into the information from portfolio companies, and this systems, so that they are capable of continuing DRIVE GROWTH PARTNERING TO 3. pre-investment process. Investment teams with and building on valuable work in this area incorporates several core ESG metrics. We are start considering ESG right from the initial over the long term. also tailoring metrics for certain companies, to screening stages through to the investment enable better monitoring of ESG matters which as they cover any potentially material ESG The British footwear brand Dr. Martens are material to their business. risks or opportunities (for example, regulatory (P5, 2014) was one of the first businesses the Investors in the funds increasingly ask for more compliance, liabilities, cost savings, new revenue Permira fund backed in 2014. Early on, we information on our overall ESG performance. streams or potential reputational issues). were able to identify a number of ways that the company could extend and formalise pre- Investors used to focus on whether private

There have been certain instances where existing sustainability initiatives, and develop equity funds had a policy and approach to SECTOR FOCUS 4. significant ESG issues have played a part a more formalised sustainability strategy. integrating ESG in the investment process. in a decision to walk away from a deal. The strategy focuses on a number of key areas, Now, we are asked for company-by-company However, in the majority of cases, our including supply chain and ethical trade. To performance reporting. approach involves assessing the associated manage these issues, the firm has developed In response, we have developed a new short and longer-term risks and opportunities, long-term relationships with a small number reporting format which highlights the key and then considering how portfolio company of trusted suppliers. Dr. Martens also works areas that companies are working on, their management teams can manage those once with supply chain auditing company Impactt, aims for the coming year, certifications they the investment has been made. which frequently visits supplier sites auditing

hold and the international standards they PDM 5. against Dr. Martens' Supplier Code of Conduct. Post-investment, we engage with portfolio adhere to. We also report to investors and In 2016, 20,500 first tier supplier employees company management teams to understand other stakeholders through annual Principles were covered by Dr. Martens' Supplier Code how they manage ESG issues in more depth, for Responsible Investment (PRI) reports and of Conduct, and audits are undertaken on and focus on the main opportunities for further to investors using PRI’s Limited Partners new and existing suppliers, with 70% of Tier I improvement. For some companies, we also Due Diligence Questionnaire. footwear suppliers audited in 2015 and 2016. undertake site visits during the investment to see how ESG issues are managed on the ground. Since the Permira funds’ investment, Dr. Martens has formed a sustainability committee that Driving better ESG outcomes reports directly to the Board, while also offering RESPONSIBLY INVESTING 6. across our funds' portfolio companies customers more information on its approach to sustainability. As Dr. Martens continues to Our approach is to work in collaboration with develop its approach, we are pleased to have We are tailoring metrics for certain management teams to identify ESG initiatives promoted both high-quality internal dialogue companies, to enable monitoring of which they also see value in focusing on. An and greater external transparency around ESG ESG matters which are material to important part of this is to also demonstrate strategies that bring genuine business benefits. their business. the business case, in addition to the benefits More generally, ESG is an important part of the for the environment, workforce or communities.

knowledge-sharing we encourage between ADINAH SHACKLETON CONTACT US 7. For example, energy efficiency programmes will portfolio companies and with our own HEAD OF ESG lead to direct cost savings, while fewer health Investment Professionals. and safety incidents will result in less lost time.

1 Employee and enterprise value data for the current Permira funds' portfolio companies in aggregate as at 31 December 2016. 50

ESG approach continued

ESG key milestones

2010 2010 2011 2012 2015 2016 Formal ESG Permira Permira Permira Permira hired Head of ESG framework launched ESG Group adopted won BVCA first Head of joined BVCA established Principles for Responsible ESG, Adinah Responsible Responsible Investment Shackleton Investment Investment Award Advisory Group

2016 ESG highlights

Head of ESG joins Better portfolio group reporting 1st

Demonstrating commitment Introduced systematic KPI monitoring ESG value creation training run to ESG as part of value creation for P5 and P6 portfolio companies for Investment Professionals and protection through internal iLevel data tools

100% 1m 100%

Of new joiners agree to abide by People benefited through Social Of new P5 and P6 investments Business Principles during inductions Business Trust since inception in included ESG in papers for 2010. Permira is a founding partner Investment Committee in 2016 of SBT, a partnership between seven leading global businesses PERMIRA ANNUAL REVIEW 2016 51 INVESTING RESPONSIBLY WHO WE ARE WE WHO 1. SELLING WELL & BUYING 2.

Embedding sustainability through the investment process

INVESTM ED IN ENT RAT PRO DRIVE GROWTH PARTNERING TO 3. EG CE NT SS I ES

E C I T L C E A D R P B Y T S D E E B A 4 1 L G T N E I Monetisation Asset Selection A R

M SECTOR FOCUS 4. A

& Origination S H

S

3 2

S

R Value Creation Diligence & E A T C & Monitoring Deal Execution T T A I O Business M N T A O Transformation H

R PDM 5. I W EN N TA O T D E D SE U OC F

EASY TO H A N D L E

1 2 3 4 RESPONSIBLY INVESTING 6. Selection: Entry: Stewardship: Exit: Asset selection & origination Diligence & deal execution Value creation & monitoring Monetisation business transformation ESG screening and analysis ESG forms part of due diligence Detailed consideration is given of portfolio investments carried out by investment teams Material issues raised in due to progress made by portfolio and teams including compliance, liabilities, diligence addressed by portfolio companies on ESG during the life reputational issues, risks and company management teams of the investment opportunities. Potential issues Engagement with portfolio Consideration given to information and mitigation explored with CONTACT US 7. support from ESG specialists. companies through ESG of an exit process and severities reviews and site visits to identify of likely acquirers External advisers engaged opportunities for improvement where required Financial and non-financial Material ESG matters integrated data gathered, monitored and into value creation plans addressed where appropriate for monitoring over lifetime of investment 52

CASE STUDY INTELLIGRATED

Intelligrated is a leading provider of advanced automation and fulfilment solutions in North America. Its solutions and services enhance productivity, optimise operational performance and minimise costly downtime.

The Permira funds invested in Intelligrated The company also invested in technology in 2012, and exited in 2016. Together, we that enhances both worker safety and achieved more than 300% sales pipeline productivity in fulfilment and distribution 4 growth and more than 90% revenue centres, and in stores. This involved robotic growth, several major new customer wins, solutions to load and unload trucks, and Consecutive years and significant expansion into emerging introducing software capabilities such as winners of markets. In 2013 and 2014, Permira as voice and light directed order picking, Top Workplaces undertook an ESG review of the company. significantly increasing working accuracy award Through this exercise, we identified several and efficiency. Talent acquisition and opportunities for improvement. development and employee health and The most pressing task was to develop safety have also been priorities, with the recordable incident rate falling from 5.00 an overarching and cohesive sustainability strategy, bringing together several, in 2008 to 3.83 in 2015, versus an industry somewhat disparate, ESG policies and average of 5.10. 3.83 initiatives. Following this, enhanced monitoring and reporting was particularly OHSA recordable important to get right. This involved incident rate developing a supplier code of conduct, (2015) audit procedure and reporting program, better monitoring energy consumption. PERMIRA ANNUAL REVIEW 2016 53 INVESTING RESPONSIBLY

CASE STUDY WHO WE ARE WE WHO 1. TERACO

Teraco Data Environments is a leading provider of carrier-neutral data centre services in sub-Saharan Africa. The company benefits from an attractive, underpenetrated market with strong secular growth. The funds' plan was to support a high-quality management team with a clear growth strategy and a differentiated business proposition. SELLING WELL & BUYING 2. DRIVE GROWTH PARTNERING TO 3.

During 2016 we completed an ESG review. efficient fans for the cooling units, indirect Overall, our view was that good systems free-cooling, ultrasonic humidification and processes were in place, but that there and installation of LED lighting. These 100% were opportunities for improvement. Adinah initiatives have directly resulted in Teraco Shackleton joined the board level discussion Data Centres power usage effectiveness Senior management SECTOR FOCUS 4. where the Teraco team communicated the (PUE), a measure of energy efficiency, completed ESG priorities, and several key initiatives have improving by approximately 7% from Business Ethics since moved forward. March 2016 to March 2017. Further training The first of these was the formation of a investment will be made in the following Social and Ethics committee, reporting to years to continue improving energy the Board. Senior staff have also received efficiencies. Rainwater harvesting tanks training in business ethics, and a commitment have also been installed in Durban saving approximately 200,000 litres per annum. has been made to monitor the company’s PDM 5. activities in respect of the principles of Health and safety, including fire safety 7% the UN Global Compact. In 2016 senior and electrical safety, is also a critical staff undertook Business Ethics training. priority. In 2016 the health and safety Reduction in PUE Meanwhile, a firm-wide ESG policy has been lead at the company attained the globally in 12 months developed, approved and communicated recognised health and safety certification, to employees. NEBOSH, to ensure appropriate training Environmental impact, in particular on key risks. In this spirit, new supplier monitoring and reducing energy agreements have been rolled out which RESPONSIBLY INVESTING 6. consumption, is a key priority for the incorporate a ‘red card’ clause relating business. Various initiatives have been to non-compliance with health and implemented in 2016 at Teraco facilities safety processes on Teraco premises and including the installation of energy reporting of health and safety incidents to the board has been introduced. CONTACT US 7.

54

Our offices

EUROPE

FRANKFURT MADRID Permira Beteiligungsberatung GmbH, Permira Asesores S.L., Bockenheimer Plaza Marqués de Salamanca 10, Landstrasse 33 60325 Primero Izquierda.,28006, Frankfurt am Main Madrid, Spain T: +49 69 97 14 66 0 T: +34 91 418 24 99 F: +49 69 97 14 66 99 Jörg Rockenhäuser F: +34 91 426 11 93 Pedro López Head of Frankfurt Head of Madrid GUERNSEY MILAN Permira (Guernsey) Limited, Permira Associati S.p.A, PO Box 503, Trafalgar Court, Palazzo Spinola, Les Banques, St Peter Port, Via San Paolo 10, Guernsey, GY1 6DJ 20121 Milan, Italy T: +44 1481 743 200 T: +39 02 76 00 47 40 F: +44 1481 743 201 Alistair Boyle F: +39 02 76 00 47 06 Fabrizio Carretti Head of Guernsey Head of Milan LONDON Permira Advisers LLP, Permira Advisers SAS, 80 Pall Mall, London, 6 rue Halévy (2nd floor), SW1Y 5ES, 75009 Paris, France T: +44 20 7632 1000 T: +33 1 42 86 63 78 F: +44 20 7930 3185 Philip Muelder Benoit Vauchy Head of London Head of Paris LUXEMBOURG STOCKHOLM Permira Luxembourg S.à r.l, Permira Advisers AB, Birger 488, route de Longwy, Jarlsgatan 12, L-1940 Luxembourg 114 34 Stockholm, Sweden T: +352 26 86 811 T: +46 8 503 122 00 F: +352 26 86 8181 F: +46 8 503 122 99 Séverine Michel Ola Nordquist Head of Luxembourg Head of Stockholm

US

MENLO PARK NEW YORK Permira Advisers LLC, Permira Advisers LLC, 3000 Sand Hill Road, Building 1 320 Park Avenue, 28th Floor, Suite 260, Menlo Park, New York, NY 10022, CA 94025, United States United States T: +1 650 681 4701 T: +1 212 386 7480 F: +1 650 853 0180 Brian Ruder F: +1 212 386 7481 John Coyle Head of Menlo Park Head of New York PERMIRA ANNUAL REVIEW 2016 55 CONTACT US WHO WE ARE WE WHO 1.

ASIA

HONG KONG

Permira Advisers Limited, SELLING WELL & BUYING 2. Room 2804, 28/F One Exchange Square, 8 Connaught Place, Central, Hong Kong T: +852 3972 0800 F: +852 2111 1148 Alex Emery Head of Hong Kong SEOUL Permira Advisers Limited,

Sewha Building 2Fl, DRIVE GROWTH PARTNERING TO 3. Dosandaero 67gil 29, Kangnamku, Seoul 135-954, Korea T: +82 2 3448 4640 F: +82 2 3448 4641 Sean Lee Head of Seoul

SHANGHAI

Permira Advisers (China) Limited, Suite 3804, K. Wah Centre,

1010 Huai Hai Zhong Road, SECTOR FOCUS 4. Shanghai, 200031, China T: +8621 8032 1333 F: +8621 8032 1338 Jim Tsao Head of Shanghai TOKYO Permira Advisers KK, Akasaka Intercity Building 3F, 1-11-44 Akasaka, Minato-ku, Tokyo 107-0052, Japan PDM 5. T: +81 (0)3 6230 2051 F: +81 (0)3 6230 2052 Ryo Fujii Head of Tokyo

PDM RESPONSIBLY INVESTING 6. LONDON Permira Debt Managers, 80 Pall Mall, London, SW1Y 5ES, United Kingdom T: +44 20 7632 1000

James Greenwood Chief Executive Officer CONTACT US 7.

56

Disclaimers

PLEASE NOTE THE FOLLOWING: No representations or warranties whatsoever (whether expressed or implied), including In this document, “Permira” means Permira representations or warranties relating to the Holdings Limited and its subsidiaries, including completeness or accuracy of the information the various entities which each individually contained herein, are given. No person has act as advisers or consultants in relation to the been authorised to give any information or Permira funds. The “Permira funds” and the make any representation not contained herein “funds” refer to one or more of the following and, if given or made, such information or buyout funds advised by Permira: Permira VI representation may not be relied upon. (P6), Permira V (P5), Permira IV (P4), Permira Europe III (PE3), Permira Europe II (PE2) Certain information contained herein and/or one or more Permira debt funds regarding the Permira funds is aggregated as appropriate. information relating to a number of Permira funds or has been derived by Permira. The valuation of remaining investments of Such information is not reflective of the the Permira funds has been calculated in performance of individual funds or portfolio accordance with the International Private companies of those funds and no investor Equity and Venture Capital Guidelines. will benefit from those aggregated or derived “Partner” is a title applied internally within returns. Past performance information Permira to certain senior professionals who contained in this document is not an indication are treated within Permira as partners, but of future performance. All statements of not necessarily implying the carrying on of opinion and/or belief contained herein and a business as a partner or in partnership. all targets, forecasts or statements relating to expectations regarding future events or the Portfolio company financial information possible future performance of any Permira has been converted based on the following funds or portfolio companies represent exchange rates (31 December 2016): the assessment of Permira on the basis of €1 = US$1.05, €1 = £0.86, €1 = ZAR14.39, information available to it as at the date of €1 = HRW1269.59, €1 = HKD122.99, this document. No representation or warranty €1 = ¥122.99. is made or assurance given that any such This document should not be considered as statements, views, projections or forecasts are a recommendation by Permira in respect of correct or that the objectives of such funds or any investment fund managed or advised businesses will be achieved. This document by Permira and does not contain all the does not constitute an offer to sell, nor the information necessary to evaluate any such solicitation or any offer to subscribe for or fund. Information contained in this document acquire, any interests in any Permira fund or is believed by Permira to be accurate as at in any portfolio company of a Permira fund. the date of this document; however, Permira The information contained herein does not accepts no responsibility for such information constitute investment advice for the purposes and no reliance should be placed upon it. of the EU Markets in Financial Instruments Investors and prospective investors should not Directive (2004/39/EC) as implemented treat this information as advice in relation to or advice for the purpose of Article 53 of legal, taxation or investment matters. Permira the UK Financial Services and Markets Act does not assume any obligation to, and does 2000 (Regulated Activities) Order 2001 not intend to, update any of the information (as amended) and no person should contained herein. construe or rely on the information as such. Designed and Produced by Friend www.friendstudio.com PERMIRA ANNUAL REVIEW 2016 WWW.PERMIRA.COM