Permira Funds'

Permira Funds’
Case CASE Studies STUDIES
FEBRUARY 2010
February 2010
February 2010

Contents
CONTENTS
Contents
01-02 Homebase
01 - 02 Homebase
03 - 04 Inmarsat
05 - 06 debitel
03-04 Inmarsat
05-06 debitel
07-08 Jet Aviation
09-10 NDS
07 - 08 Jet Aviation
09 - 10 NDS

Realisation 2002: Homebase
01
+
+
Second largest home
improvement retailer in the UK
Unique acquisition carried out
with corporate partners
Value creation plan
underpinned by strategic
change in the business:
introduction of new ranges and
store formats, carried out by
new management
Exit to corporate buyer resulting
in a 6.1x multiple
Permira Funds’ Case Study

02
Realisation 2002: Homebase
Homebase
www.homebase.co.uk
Homebase is the UK’s
second largest home improvement retailer and is
recognised for choice, style and customer service across
the home enhancement market. It has more than 300
stores throughout the UK and Republic of Ireland, and
sells over 30,000 products to more than 70 million
customers per year.
Sector
Consumer (Retail)
Origin
Corporate
Employees
17,000
In March 2001, Homebase was acquired by a
company backed by the Permira funds from one
of the UK’s largest supermarket chains,
J Sainsbury plc.
Unique acquisition process – Completing the
investment in Homebase required a unique
bidding approach. Permira’s investment
professionals worked in partnership with J
Sainsbury and another retailer, Kingfisher, to
divide up the business’ property portfolio so that
the Permira funds were left with a more targeted
store network. The goal was to allow Homebase
to refocus as a local, high-quality decorating and
furnishings business.
streamlined; its online offering rationalised; direct
sourcing from Asia accelerated; and product
availability improved.
Performance improvement – This activity led
to a significant improvement in Homebase’s
performance. Sales rose from £1,274 million in
March 2001, when the Permira funds acquired the
business, to £1,380 million in December 2002, a
like-for-like sales growth of 17.6%. When the
business was sold to another retailer, GUS plc,
the Permira funds received £762 million, which
represented a 6.1x multiple and an IRR of 204%.
Ownership
Majority
Date of Investment
March
2001
Date of Realisation
December
2002
Permira Contacts
Charles Sherwood
Cheryl Potter
The company’s largest ‘megastore’ sites were
bought by Kingfisher, while the freeholds to the
rest of the Homebase portfolio were acquired by J
Sainsbury. This allowed the Permira funds to
invest £401 million to acquire the operational
heart of a business valued at £865 million.
Strategic repositioning – The investment in
Homebase was motivated by a clear growth
opportunity. The goal was to develop a unique
market position that would combine a focus on
DIY with an extensive furnishings and decoration
range – offering a ‘softer’ product range in a
‘high-street-style’ store format with improved
customer service. This meant a complete strategy
change for Homebase, which would be required
to focus on smaller stores, introduce new product
ranges and install mezzanine floors to intensify
the use of sales space.
Sales and EBITDA (£m)
2001 - 2002
1,274
1,380
A new management team was appointed to drive
this vision, with seven of the nine members of the
executive board replaced, including the chairman,
chief executive and chief financial officer. Costs at
the company’s HQ were reduced; product ranges
74
122
03 / 2001 12 / 2002
Sales EBITDA
(Source: Permira)
Permira Funds’ Case Study

Realisation 2005: Inmarsat
03
+
+
Leading provider of global
mobile satellite
communications services
Complex acquisition process,
facilitated by strong relationships
with disparate shareholder base
Value creation driven by
significant capex – $1.5 billion
invested in new satellite platforms
Successful IPO delivering 3.6 x
investment cost; shares continue
to trade very well
Permira Funds’ Case Study

04
Realisation 2005: Inmarsat
Inmarsat
www.inmarsat.com
Inmarsat is a leading
provider of global mobile satellite communications
services (“MSS”) and has been designing, implementing
and operating satellite networks for 30 years. The
company was established by the International Maritime
Organization as the first provider of MSS, initially to offer
communications and safety services to ships at sea.
Based in London, the company today operates a fleet of
11 geostationary satellites, covering 36,000 km of the
earth’s surface.
In December 2003, a company backed by the
Permira funds, another financial investor, and the
strategic shareholders Telenor and Lockheed,
acquired Inmarsat Ventures plc. At the time of
acquisition the business was the number one
player in a stable and growing market, with a
strong reputation for technical excellence and
identifiable growth in the mobile broadband
market. However, the business had suffered
from a fragmented ownership structure which
inhibited its ability to grow.
Complex acquisition – Permira took time to
understand Inmarsat, building relationships with
the 83 corporates and government entities that
constituted the shareholder base, so that the
disparate motivations of the company’s owners
could be identified. These discussions were led
by Permira’s Stockholm office, which worked
closely with Telenor, one of Inmarsat’s largest
shareholders. By reaching agreements with the
key corporate shareholders – KPN, Deutsche
Telekom and Telenor – Permira were able to
conclude the transaction while offering a price
that was not the highest on the table. Ultimately
the strong relationships of trust that were built
with the owners of Inmarsat allowed the
transaction to be completed.
World class management – Following
acquisition, Permira’s investment team worked
with the company to put in place a clear and
ambitious value creation plan, appointing a new
management team with the skills and ability to
drive the plan forward. Andrew Sukawaty, the
former CEO of Sprint PCS, was appointed as
chief executive and chairman, while a new chief
financial officer was appointed from a News
Corporation subsidiary NDS (a company that
would later join the Permira funds’ portfolio).
Permira Funds’ Case Study
Investing in technology – Central to the
management team’s growth plans for Inmarsat
was a substantial capital expenditure
programme. $1.5 billion was invested in the
design, launch and manufacture of the I-4 range
of satellites – the most advanced commercial
mobile communications spacecraft of their kind.
Alongside the capital investment programme,
Inmarsat’s management team implemented a
cost reduction plan and also completed a
sale-and-leaseback on its London
headquarters.
Performance improvement – As a result of its
investment programme, Inmarsat demonstrated
a significant improvement in performance. After
an initial decline (driven by a one-off fall in
non-recurring revenue), sales and EBITDA both
began to rise, while the launch of the first I-4
satellite in 2005 cemented the company’s
market leading position.
In March 2006 the Permira funds completed the
sale of their holding in Inmarsat, following an IPO
in June 2005. In total, the Permira funds realised
€537 million from the investment, representing
an IRR of 121% and a 3.6x multiple. Today
Inmarsat continues to thrive. Its shares have
consistently outperformed the market and the
business is now a member of London’s ‘blue
chip’ FTSE 100 index.
Inmarsat’s performance demonstrates the
strength of the Permira approach: strong local
networks and sector expertise.
Sector
TMT (Telecoms)
Origin
Corporate
Employees
600
Ownership
Majority
Date of Investment
December
2003
Date of Realisation
June
2005
Permira Contacts
Carl Parker
Richard Sanders
Sales and EBITDA (€m)
2003 - 2005
505
337
52
2003 2004*
Sales
481
302
EBITDA
(Source: Permira)
491
317
2005
*Decline in sales attributable
to high levels of non-recurring
revenue in 2003

Realisations 2008: debitel
05
+
+
Mobile phone services
provider acquired in 2004
from corporate seller. Grew
substantially under Permira
funds’ ownership
Value creation plan based
on strategic repositioning and
growth though acquisition
Substantial sales and
EBITDA improvements
Sold to synergistic corporate
buyer in 2008, generating 3.1 x
investment cost
Permira Funds’ Case Study

06
Realisations 2008: debitel
debitel
www.debitel.com
debitel is a mobile phone
services provider based in Germany. The company serves
over 14 million customers and is the number one
distribution platform for mobile phones in Germany. The
company offers a wide range of telecommunication
products, including mobile and fixed-line telephony as well
as internet services.
Sector
TMT (Telecoms)
Origin
Corporate
Employees
3,700
Ownership
Majority
debitel covers all German operators (T-Mobile,
Vodafone, eplus and O 2
) and has a number of
exclusive relationships with German retailers.
debitel operates a retail network of more than
6,000 sites in Germany alone.
debitel was acquired by a company backed by
PE3 from Swisscom in June 2004. The value
creation was based on three major levers:
Restructuring and cost leadership - debitel
came out of a period of uncertainty, with a failed
participation in the German UMTS auction, a
poor operational situation with many
loss-making divisions and unstable
relationships with its partners. After the
investment by the Permira funds, debitel
re-established reliable long-term partnerships
with its key business partners, i.e. mobile
network operators as well as large retailers.
In parallel, significant cost reduction was
implemented through the establishment of the
programme office. This programme office
implemented three far-reaching operational
improvement programmes resulting in an
annual EBITDA contribution of €160 million in
2008. To drive this, a ‘best in the industry’
management team was introduced.
Focus and evolution of business model – a
strong regional focus was placed on the
German core market with the sale of debitel’s
international sub-scale subsidiaries in Demark,
France and Slovenia. At the same time, the
company improved its business model in
Germany by instituting higher margin contracts
with features typical of mobile virtual network
operators and broadening the product.
spectrum through the inclusion of DSL and
original MNO-products
Consolidation and market leadership - the
company actively drove the consolidation of the
German mobile telephony market. The
acquisition of ‘_dug’, the largest independent
retailer of mobile telephony products in
Germany, was key to growing debitel’s retail
chain from around 80 at the time of the initial
investment to more than 500 owned outlets by
2008. This growth allowed debitel to reduce
significantly its dependence on indirect
distribution channels. In July 2007, debitel
acquired Talkline, the third largest mobile
service provider, giving debitel 3.8 million
additional customers. As a result debitel
achieved market leadership, becoming the
number one distribution platform of mobile
phone services in Germany, ahead of Vodafone
and T-Mobile. The full integration of
Talkline, _dug and debitel is expected to deliver
another €100 million of savings, which will
contribute strongly to the high cashflow
performance of the company.
After becoming the clear market leader in
the German mobile market, debitel attracted the
interest of the Freenet Group, which was the
second largest mobile service provider at that
time. Following the clear industrial logic of
continued market consolidation, debitel was
sold to Freenet in July 2008. The investment
generated 3.1 x investment cost.
Date of Investment
June
2004
Date of Realisation
July
2008
Permira Contacts
Jörg Rockenhäuser
Martin Fark
Sales and EBITDA (€m)
2005 - 2007
2,726
172
2,616
160
3,696
255
2005 2006
2007
Sales
EBITDA
(Source: Permira)
2007 figures proforma for acquisitions /
realisations
Permira Funds’ Case Study

Realisations 2008: Jet Aviation
07
+
+
Transformed Swiss-centric
family company into a global
leader for business aviation
Value creation plan based on
investing significant capital
to support growth
Acquisitions and alliances
supported expansion into
the US, Russia and China
Improved performance:
substantial increase in sales
and EBITDA
Sold to a trade buyer to deliver
3.9 x investment cost and an
IRR of 57%
Permira Funds’ Case Study

08
Realisations 2008: Jet Aviation
Jet Aviation
www.jetaviation.com
Jet Aviation (“Jet”)
is a Swiss-based international business aviation
services company. The company provides
service, completions and refurbishment,
engineering and fixed base operations,
along with related aircraft management and
charter services.
Sector
Industrials
Origin
Family Owner
Employees
5,600
In October 2005, after a three-year origination
process, a company backed by PE3 acquired
Jet from the company’s founding family.
Following acquisition, the Permira funds backed
an ambitious value creation plan, transforming a
Swiss-centric family company into a global
leader for business aviation services. The
Permira funds helped Jet become more focused
and efficient, establish a world class
management team and invest significant capital
to support growth. Carl Hirschmann, a member
of the family that founded Jet (and a minority
investor alongside the Permira funds), explains:
“The Permira funds allowed Jet to grow at a
speed and with a determination which we could
not have managed as a family-owned company.
Furthermore, Permira supported the
professionalisation of the business as a key
enabler for the rapid expansion.”
Immediately following acquisition, a programme
office was established that focused on
industrialisation and scalability of existing
processes in the organisation, adding €35
million to EBITDA after only two years. To expand
capacity, more than €60 million was invested in
new facilities, leading to the construction of one
of the largest aircraft hangars in Europe. Located
at Basel’s EuroAirport, the new 9,600 square
metre wide-body hangar was opened in May
2008 and took just seven months to complete.
acquired US-based maintenance and
completions company Savannah Air Center to
strengthen further Jet’s position as a full
business aviation service provider in North
America. In total the Permira funds backed an
investment of US$300m in Jet’s US business.
Throughout its period in the Permira funds’
portfolio, Jet expanded into new fast-growing
markets. The company set up line maintenance
operations in Moscow’s Vnukovo International
Airport and moved forward with plans to open
new facilities at Beijing’s Capital International
Airport in partnership with Beijing-based
Deer Air.
On a reported basis, sales grew at a CAGR
of 25% from 2005 to 2007 and the value of the
order pipeline at Jet increased from €50 million
at the date of the fund’s investment to €1.2 billion
by June 2008. The company’s workforce also
grew by 70% to around 5,600 employees. Jet is
now one of the leading business aviation
services companies in the world.
In August 2008, despite the global economic
downturn, it was announced that Jet was to be
acquired by global defence and aviation group
General Dynamics. The sale was completed just
days after the collapse of Lehman Brothers. The
Permira funds realised 3.9 x investment cost and
an IRR of 57%.
Ownership
Majority
Date of Investment
October
2005
Date of Realisation
November
2008
Permira Contacts
Jörg Rockenhäuser
Torsten Vogt
Sales and EBITDA (€m)
2005 - 2007
Jet also expanded by making strategic
acquisitions. In March 2006, it acquired
Midcoast, a US-based aircraft maintenance and
modification company, which expanded
significantly the company’s presence in North
America. More recently, in January 2008, Jet
The sale of Jet shows the resilience of demand
from trade buyers for strategically important
assets, especially when the impact of
operational change has been to transform the
asset’s performance and market position.
502
56
685
83
2005 2006
787
2007
103
Sales
EBITDA
(Source: Permira)
Permira Funds’ Case Study

New Investment: NDS 2009
09
+
+
Leading provider of media
content security technologies
Acquired in partnership with
News Corporation in February
2009 in proprietary process
Strong growth performance
sustained since acquisition a
year ago
Value creation plan based
around further international
expansion in emerging
markets, the strengthening of
its presence in the cable
market and new product
innovation
Permira Funds’ Case Study

10
New Investment: NDS 2009
NDS
www.nds.com
NDS is a leading
provider of media content security, enabling
technologies and interactive applications for
pay-TV operators. NDS protects US$40 billion of
pay-TV revenues worldwide and enjoys
longstanding relationships with leading pay-TV
operators such as DirecTV, BSkyB, Sky Italia, Tata
Sky, Canal+, Sky Deutschland and Viasat.
NDS was acquired in a public-to-private
transaction in January 2009 by a company
backed by Permira IV. The acquisition was done in
partnership with the international media group
News Corporation, the original owner of NDS,
which retains a significant interest in the business.
As a result of the acquisition NDS was delisted
from Nasdaq.
A market leader - NDS creates technologies
and applications that enable pay-TV operators to
securely deliver digital content to TV set-top
boxes, digital video recorders (DVRs), personal
computers, mobile phones and other multimedia
devices. The company’s key technologies include
the world’s market-leading conditional access
and digital rights management technology,
market-leading setup box operating systems,
DVRs and electronic programme guides. Today,
over 70 of the world’s leading pay-TV platforms
rely on NDS solutions to protect and enhance their
businesses. Research and development is key for
the company to maintain its market-leading
positioning and continue to develop innovative
technologies for its customers. The business is
totally committed to uphold its track record of
innovation and over 75% of NDS’ workforce is
dedicated to ongoing research and development
work in its offices around the world today.
A proprietary investment - The investment in
NDS was originated by Permira’s media and
technology team on a proprietary basis. The team
had been following the set-top box industry for
many years and was particularly interested in the
software end, a fast growing and very profitable
niche in the market. The team had reviewed most
of the companies competing in that space over
time and NDS was identified early as a clear
outperformer. In addition the team’s extensive
industry network meant that they knew the
ex-CFO of the business well, as they had worked
with him on another successful TMT investment in
the satellite business Inmarsat. The team also had
Permira Funds’ Case Study
strong relationships with News Corporation. This
in-depth industry expertise combined with the
team’s extensive industry network clearly
positioned Permira as a natural potential acquirer
of the business when News Corp. decided to sell
a majority stake in the business in 2008.
A corporate partnership - The Permira funds
have a long history of partnering with families,
corporates and management teams to invest in
and build better businesses. It was Permira’s long
standing relationship with News Corp. and their
shared vision for NDS and its growth prospects
that initiated the exclusive acquisition talks. The
Permira team’s experience of governance
structures suitable to corporate partners
ultimately made this investment compelling for all
parties.
A strategy to create value - NDS has
continued to perform strongly over the past 12
months since acquisition despite a difficult
economic backdrop. During this time the
business has made considerable progress on
executing its expansion into emerging markets,
particularly China and India. Today, the
management team, with Permira’s support, is fully
focused on continuing to grow the business.
International expansion is well underway with NDS
actively seeking new contracts for its existing
technologies in fast growing emerging markets. It
is also working hard on reinforcing its position in
the US and European cable market segments by
providing value added services designed to
improve the customer experience including better
user interface, user-friendly programme guides
and multi-room DVR facilities. Finally, NDS is
committed to maintaining its innovative edge and
focused on strengthening its existing client
relationships by creating the applications and
technology of the future such as targeted
advertising technology for DVRs .
Sector
TMT (Technology)
Origin
Corporate
Employees
4,270
Ownership
Majority
Date of Investment
January
2009
Permira Contacts
Damon Buffini
Richard Sanders
Benoit Vauchy
Alex Margoline
Sales and adjusted EBITDA
(US$m) Q3 2009 vs Q3 2010 (F)
187
52
Q3 - 2009
Sales
222
65
Q3 - 2010 (F)
Adjusted EBITDA
Q3: January to March period
(Source: Permira)