Permira will focus on expanding Acuity, a provider of research, analytics and business intelligence to the financial services sector, into new adjacencies, especially Asia and the US, principals Chris Pell and Daniel Tan told PE Hub Europe.
London-headquartered Permira will acquire a majority stake in Acuity Knowledge Partners from Equistone Partners Europe, which will reinvest in Acuity as a minority shareholder. The deal is likely to close in the second quarter of 2023.
Acuity is headquartered in London and has a global client base of more than 500 financial service firms. It has offices in the UK, USA, India, Sri Lanka, Costa Rica, China and Dubai.
Permira has noted certain trends within financial services, outsourcing being a big one. “Particularly within the financial services sector and big global corporates, firms are getting more comfortable with using global specialised providers, and outsourcing non-core parts of their operations is one part of it,” said Pell.
Tan agreed with Pell’s sentiments, especially regarding specialised providers, which according to him lead to embeddedness and long-term customer relationships. “It means that when you see market volatility, you’ve got many levers to pull,” said Tan. “Different ways to learn and expand within the customer base, different touch points and lots of relationship capital to draw upon and to innovate new products into.”
Off the back of investments such as Tricor and Alter Domus, Pell describes Acuity’s sub-sector as one where Permira spends a lot of time originating, screening and looking for businesses with similar characteristics or that benefit from similar structural growth trends. “From a services strategy point of view, Acuity clearly ticked a lot of those boxes.”
Tricor is a Hong Kong-based business expansion specialist Permira exited in 2021. Luxembourg-headquartered Alter Domus, a current investment in Permira’s portfolio, is a provider of fund administration and corporate services to the alternative investment industry.
“The base case plan here is all around continued momentum in their organic growth story, helping the management with some of the expansion into adjacencies; really helping them expand in Asia and expand their connectivity and network in the US, in particular,” said Pell.
Tan stressed that Acuity is “not tapped out” in its core markets of Europe and the US, allowing for further penetration in Europe too. “Because of the way that Permira is set up, cross-border collaboration is easy,” Tan explained. “That’s where we’re at our best – helping companies work out where they can look at new targets or helping them build global boards.”
Acuity is considering entering a couple of “new pillars” according to Pell, which Permira will help the company explore. These include areas that Acuity’s competitors offer, such as support to corporations and risk management.
Another value creation perspective is pushing Acuity’s technological capabilities. Tan described the company as “forward leaning” in its industry, as Acuity leverages artificial intelligence and machine learning in some of its applications. But as technological disruption is constantly evolving, Tan believes there is more to be done. “I think we can identify the right kind of board members and technology partnerships to help them go further,” he said. “It’s both offence and defence if you think about it.”
While the focus is on organic growth, Pell believes Acuity will have an inorganic growth story too. “We will help them explore that.”
Permira is relaxed when it comes to considering exit strategies for Acuity. “The existing shareholder, Equistone, when we first met them a year ago, said to me, ‘great businesses get bought and not sold’,” said Pell. “And I think this is a great example of that here.”
Editor’s note: This article was amended to make clear that the final quote was referring to the likely exit strategy.