Permira has a history of around 40 years of backing secular growth trends. In line with this, the firm has increased its climate investing activities within climate and built a team to invest throughout the climate transition value chain. While the need to deliver global net zero by 2050 goals equates to annual spending of around $3.5 trillion,26 climate transition as an industry is still relatively nascent. As such, climate-focused companies require both capital and value creation expertise to aid in accelerating this transition.
Much of what companies in this industry need aligns with Permira’s reputation for being growth investors at scale. The firm’s history of making the most of its resources and the expertise of its senior advisers, operating partners and dedicated value creation team to help its portfolio companies’ management teams drive growth, positions the firm well to be a partner of choice for many climate transition businesses. As with each investment the firm’s funds make, a detailed and expansive value creation plan for these businesses would be a key driver of growth. For climate more specifically, several important value creation levers can be drawn upon.
First, investing in operations to enhance product offerings and drive efficiencies for these climate transition businesses is key. This includes implementing new systems and processes, further technical enablement and digital transformation, maturing GTM approaches, refining customer segmentation and pricing, marketing effectiveness initiatives and enhancing/growing a company’s sales and marketing functions. These measures, deployed in partnership with management teams, are critical foundations for investments that Permira seeks to back in the climate sector.
Second is to globalize portfolio companies. With a global presence, Permira is a proven partner in helping businesses bring their innovative products and services to more markets worldwide. Many businesses in climate transition industries rely on global value chains and need to expand internationally. For example, if a company is based in Europe and wants to expand into North America, Permira can make use of its global platform and network to help with go-tomarket initiatives, enabling revenue growth in markets where a company might be underpenetrated.
Third is a critical focus on access to talent. Some climate transition sub-industries are facing acute talent shortages. Permira can help its portfolio companies access and create incentives for talent in a more strategic way, allowing them to establish themselves as employers of choice. Attracting and retaining top talent ensures that employees can be part of a company that is contributing meaningfully to the climate transition.
These value creation levers, and others, need to be sequenced and considered in the context of the typical private equity investment period. The first year of an investment is one of the most important in setting the new trajectory of these businesses. Permira works closely with its management teams pre-investment and in the first few
months post-investment to determine what is achievable before putting the value creation plan into action over the long term.
As Permira partners with climate transition businesses, the value creation capabilities and resources that the firm can deploy will be crucial for delivering outperformance and ensuring those companies will help accelerate the energy transition in the years ahead.
