AI, Incumbents vs Disruptors, and Services Bets

Welcome back to the Alt Goes Mainstream podcast.

Today’s episode is with one of the executives who has helped to build one of the industry’s leading alternative asset managers.

We sat down in Permira’s London office with Co-CEO Dipan Patel to discuss the firm’s evolution and how the business has grown to over €80B in AUM.

Dipan brings a deep background in private equity investing to bear as he and his Co-CEO Brian Ruder now lead the firm through its next phase of growth.

Dipan joined Permira from Gores Group and is Co-Managing Partner and Co-CEO of the firm. He serves on Permira Holdings Limited Board and Permira’s Investment Committee and Executive Committee. He’s focused on technology and services investing, working on deals such as Renaissance Learning, Informatica, Axiom, AllTrails, Ancestry, LegalZoom, and more.

Dipan and I had a thought-provoking conversation about what it takes to build and run a scaled alternative asset manager and how to differentiate a firm and a culture. We discussed:

• The founding story of Permira and the evolution of the firm since spinning out of Schroder Ventures in 1996.
• How the firm’s beginnings have shaped the culture that has been built and how that culture has permeated how they make investment decisions, work with companies, founders, and LPs.
• How would an LP underwrite Permira’s culture?
• How the firm’s European heritage helps as an investor.
• The opportunity set in Europe.
• The investment culture at Permira and how its structure and set up helps investment processes and decision-making.
• Why software buyouts have become a larger part of the buyout investing landscape.
• How AI is impacting software investing and how AI is impacting services businesses.
• Why the firm has expanded into credit.
• The thought process behind launching a wealth solutions business, Permira Wealth, and how it reflects the culture of the firm.

Thanks Dipan for coming on the show to share the evolution of Permira and your expertise and wisdom in private markets.

A word from AGM podcast sponsor, Ultimus Fund Solutions

This episode of Alt Goes Mainstream is brought to you by Ultimus Fund Solutions, a leading full-service fund administrator for asset managers in private and public markets. As private markets continue to move into the mainstream, the industry requires infrastructure solutions that help funds and investors keep pace. In an increasingly sophisticated financial marketplace, investment managers must navigate a growing array of challenges: elaborate fund structures, specialized strategies, evolving compliance requirements, a growing need for sophisticated reporting, and intensifying demands for transparency.

To assist with these challenging opportunities, more and more fund sponsors and asset managers are turning to Ultimus, a leading service provider that blends high tech and high touch in unique and customized fund administration and middle office solutions for a diverse and growing universe of over 450 clients and 1,800 funds, representing $500 billion assets under administration, all handled by a team of over 1,000 professionals. Ultimus offers a wide range of capabilities across registered funds, private funds and public plans, as well as outsourced middle office services. Delivering operational excellence, Ultimus helps firms manage the ever-changing regulatory environment while meeting the needs of their institutional and retail investors. Ultimus provides comprehensive operational support and fund governance services to help managers successfully launch retail alternative products.

Visit www.ultimusfundsolutions.com to learn more about Ultimus’ technology enhanced services and solutions or contact Ultimus Executive Vice President of Business Development Gary Harris on email at gharris@ultimusfundsolutions.com.

We thank Ultimus for their support of alts going mainstream.

Show Notes
00:00 Introduction to our Sponsor, Ultimus

01:55 Welcome Back to the Alt Goes Mainstream Podcast

02:03 Introduction to Permira and our guest, Dipan Patel

03:47 Discussion on Distributions and Market Conditions

04:19 Selling A-Grade Businesses in Current Market

05:03 Flight to Quality in Times of Stress

06:07 Reflecting on Career and Lessons Learned

06:29 Early Career Experiences at Arthur Andersen and Lehman Brothers

07:29 Impact of Early Career on Leadership Style

09:04 Challenges in Today's Investment Environment

10:15 Underwriting in Unpredictable Times

10:45 Locating Good Companies for Investment

14:31 Importance of Market Leadership

14:59 Partnering with Founders and Executive Teams

16:22 Permira’s Co-Leadership Model

19:49 Investment Decision Process at Permira

21:02 Underwriting Character in Executives

22:54 Permira's Organizational Character and Culture

23:29 Understanding Organizational Culture

23:54 Thriving in Chaos: The Concept of Anti-Fragility

24:51 Capital Flows in Private Markets

25:26 Developing Investment Theses

25:54 Strategic Exit Channels

26:24 Supply Creates Its Own Demand

27:24 The Necessity of Access to Private Markets

28:10 Managing Stress Moments in Private Markets

28:50 Navigating Industry Evolutions

29:20 Focusing on Core Strengths

30:09 Balancing Growth and Differentiation

31:21 Investing in Growth and Buyout Businesses

32:26 Synergies Between Growth and Mature Businesses

33:38 Risk Spectrum in Investments

34:27 Understanding Runway and Market Position

35:42 Disruption vs. Destruction in AI

36:49 Investing in Platform Shifts

37:58 Control and Duration in Private Equity

39:08 The Role of AI in Incumbent Success

40:25 Cultural Adaptability to AI

42:21 Specialism vs. Generalism in Investing

43:56 Professional Services and AI

45:27 Future Investment Ideas

46:34 Mission Critical Investing

47:28 Conclusion and Final Thoughts

Editing and post-production work for this episode was provided by The Podcast Consultant.