Dry Powder: The Private Equity Podcast

Differentiated Technology Investing via Cross-Continental Strategy

-0.14%current return

"I think the first is in category leading businesses with phenomenal products where the bet is actually doubling down on the product and bending growth curve rather than milking a product to grow margins. ... We invested in a company called Informatica. We sold a few months ago to Salesforce.com as a $9 billion exit. And Bain actually helped us a lot during the diligence and the value creation there."

Patel discusses Permira's strategic approach in technology investing, emphasizing investments in category-leading software companies that focus on product enhancement and growth rather than short-term margin optimization. He cites examples such as Informatica's successful exit and Clearwater’s cross-border strategy to illustrate how leveraging European credentials can differentiate investments, suggesting a robust strategy amid competitive market dynamics.

Carve-Out Strategy Unlocks Hidden Value

+9.00%current return

"One example of that is NextTracker, which provides the tracking system for solar panels, which can improve the yield by pretty meaningful percentages, anywhere from 5% to 8% to as much as 20% for an existing solar field. Phenomenal business. And it was trapped inside Flex, a large contract manufacturer formerly known as FlexTronics. They didn't think that the business was being valued appropriately."

Steve Ellis discusses how carve-out deals can unlock concealed value in underappreciated business units. The NextTracker example illustrates the potential of isolating a high-performing asset from a larger conglomerate (FlexTronics) which was not fully valued by the market. Although not an explicit trade call, this commentary highlights the importance of operational specialization and execution expertise in realizing superior returns.