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Exclusive-Permira shifting Evelyn, Teraco stakes into continuation fund -sources

By Amy-Jo Crowley and Pablo Mayo Cerqueiro

LONDON (Reuters) - Buyout group Permira is planning to move stakes in British wealth manager Evelyn Partners and South African data centre group Teraco Data Environments into a new fund, giving investors a chance to cash out, two people familiar with the matter told Reuters.

The move to place the holdings into a so-called continuation fund is an example of how private equity firms are working to return capital to their investors, with IPO markets roiled and M&A deal flow depressed due to tough market conditions.

Evelyn's shareholders were reported last year to be considering a sale or initial public offering of the London-based company, but a transaction never materialised.

Though Evelyn has attracted interest from private equity and strategic buyers, its owners are in no rush to launch a sale or IPO of the business while markets remain rocky, one of the people and a third one said.

Discussions are ongoing, and plans may yet be altered or dropped, the people cautioned.

Permira declined to comment.

Continuation funds have grown in popularity as an alternative to a sale or a stock market listing, allowing private equity managers to hold on to certain companies for longer while returning some capital to their investors.

Permira has been working with Lazard to raise the so-called continuation vehicle that will house the investments, said the people, who spoke on condition of anonymity. A total of five holdings will be transferred to the new fund, one of them added.

When private equity firms raise a continuation fund, they seek new investors to acquire the assets and offer investors in the original private equity fund the opportunity to roll into the new vehicle or cash out.

Last year there were $44 billion of continuation fund transactions worldwide, down from 2021's peak but still significantly higher than in previous years, according to a report by Jefferies.

Permira has owned Evelyn Partners, formerly known as Tilney Smith & Williamson, since 2014, funding its growth from a 5 billion pound wealth manager to a financial group overseeing 55 billion pounds ($66.8 billion) in client assets.

In 2020, Warburg Pincus became a minority investor to help finance an acquisition.

Under current plans, Permira will only transfer part of its majority stake in Evelyn into the continuation vehicle, with its Permira V fund continuing to hold the remainder, one of the people said.

Permira has a minority stake in Teraco after selling part of its holding in the data centre group to Digital Realty last year.

Digital Realty, Evelyn Partners, Teraco and Warburg Pincus declined to comment. Lazard did not reply to a request for comment.

($1 = 0.8232 pounds)

(Reporting by Amy-Jo Crowley and Pablo Mayo Cerqueiro in London; Editing by Anousha Sakoui, Kirsten Donovan)