Buffini: Private equity faces ‘lasting changes’

The chairman of Permira says he has never experienced such a ‘lack of clarity’ over the economic outlook and has warned investors that things may get worse before recovery. Megadeals will be replaced by smaller investments for 'a very long time', he says.

Damon Buffini, chairman of UK buyout giant Permira, has warned investors of tough times ahead, as the industry adapts to smaller deals, scarce leverage and increased regulation.

“I have not experienced such a lack of clarity about the outlook in my career and there may be worse to come before we see a recovery,” said Buffini in a statement in Permira’s 2008 annual report.

Damon Buffini

The private equity veteran warned that the current market turmoil would alter the private equity landscape.

“The short term outlook may be uncertain, but we can be sure that the current turmoil will bring lasting changes to our industry on a number of fronts,” he said, “It will, for example, be a very long time before the prefix mega is applied again to the industry’s activity; investments will be smaller, albeit there will still be opportunities to invest in and transform many businesses.”

Buffini also referenced the onset of a greater level of regulation governing the activity of European private equity firms. “There may well be a higher degree of regulation than before, which will mean working even more closely with lawmakers and regulators,” he said.

Today the European Commission will announce a proposed directive, which, according to a leaked draft, will introduce a range of laws for those managing more than €250 million in alternative assets.