Dipan Patel on Permira’s ‘Artisanal’ Approach to Private Equity

0:00Good things happen to good companies and bad things happen to bad companies. And I think what AI is doing is just accelerating those things. So if you're a business that aggregates commodity data, sells it through a commodity channel with a commodity UX, you were probably already on a decline curve. And if you're a company with proprietary data and with network effects and incredibly strong brand, then you built a user experience which is built for the idiosyncrasies of a vertical. Probably you're going to be on the right side of AI. Welcome to Goldman Sachs Exchange's great investors. I'm Allison Mas. I'm about to sit down with Dipon Patel, co-managing partner, and Co-CEO Primera, a global investment firm spanning private equity and credit with approximately $100 billion in assets under management.

1:04So welcome to great investors. So great to have you here. Thank you for having me. So everyone remembers their first job. But yours must have been especially memorable. You worked at Arthur Anderson in 2002, and then after university you went to Lehman Brothers. Those must have been fascinating experiences. So tell us a little bit about them. Yeah, that's right. I worked at Arthur Anderson in 2002 during the Enron scandal, and then Lehman Brothers in OA, obviously during the global financial crisis. Formative to see two iconic companies struggle and then eventually fall before our 30 was something that, once you see it, it's hot to unsee it, and leaves lasting memories and a lot of learnings. Yeah. So tell us about Primera today for those who aren't familiar. What makes Primera unique and maybe tie in some of the lessons that you learned from earlier in your career that have helped you lead Primera today. So Primera started in 1985 as four people,

2:06$48 million from Shredders Bank. Over the last 41 years, if you wind the clock forward, the businesses raised more than $100 billion a capital. We have about 500 people, 150 investors, 16 offices globally. We invest in private equity and in credit. Our private equity business invests really across four sectors, consumer healthcare services and technology. It does it primarily across the mid market to think businesses in the kind of 200 million EV, up to 2 billion EV range, and everything we do is really significant minority. So governance would teeth all the way through to full control and to a very active owners. Then our credit business invests across private credit through to liquid credit and right through the risk return spectrum. You ask the question around what makes us unique and what was our edge. It says a few different things. The first thing is Primera raised the first pan-European fund in the late 90s.

3:08And as a result, we built boots on the ground right across Europe and just dense networks, relationships, footprints. And that served us really well. That's 50% of our investing today. At the same time, we're probably one of the very few firms that have an equal weighted US and European business. About 50% of our people sit in the US, 50% are in Europe, 50% of our capital deployed and capital return have come from both regions. So that's one. We have what we call digital core multi-sector. So we're very deep in digital. The most interesting aspect of our investing has always been at the intersection of digital and our real economy sectors. So consumer health care and services. And that's where we have a particular edge. Like a real economy business where there is a significant value creation under eye in the realm of digital is Power Ali for Primera. We have a very strong growth DNA. So we've probably got one of the fastest growing portfolios in the larger cap end of P.

4:08We are portfolio consistently grows organically low teens, top line and significantly higher at the bottom line. That's by design we over index to growth year businesses. The typical Primera business will be under levered, under margins and over growth. And we really like that formula. In the end when you're selling businesses, particularly selling businesses to strategics, you are trying to convince someone that there is a long growth runway. And you don't get there by under investing in a business and milking a business over your investment period. So we tend to invest really deeply in new products, new channels, new geographies. We often do business model transitions. But growth under rights are central to anything that comes through our investment committee. And then the last thing is we are a private company. It's not unique. There are a bunch of scale private fund. It's increasingly becoming important. But over time and we're a private partnership since inception, that's not changed.

5:11We're owned by our partners and that goes ultimately to outcomes and performance and incentives and alignment. In what ways does being private and remaining private help with your investment culture and with retaining talent and recruiting talent? So Primera is built by investors for investors. And so we won an attract people who are crafts people. So I think the industry is bifurcating between more factory models and artisanal models. And you're an artisanal model. There's no right or wrong in these models and both these models will work. But they are definitely different. And they attract different types of people. And what we do likes to craft an investment thesis. Think differently, work a deal is comfortable with really long gestation periods. Once we have an absolute expert in their space is frankly comfortable not doing deals and not being in the cadence of just allocating assets.

6:13Primera is going to be the place for you. And if you want to build new products and new channels and new business lines, there will be other firms that are better homes for those people. But Primera is the crossman's place of work. That's a great way to describe it. So thank you for that. So you've been a Primera since 2009. Was there any particular deal from early in your career that you're especially proud of? We did a deal taking a company called Renaissance Learning Private. In the US there was an ATEC company that was sold into 70,000 schools and ended up selling it in two and a half years. We made more than four times the money. We did a range of things with that company and I was fortunate to be involved in it. The reason why it's special for me was, and I think actually says a lot about our firm, when I joined, and I think we do this a lot with our junior talent, we really encourage thematic thesis driven work from the beginning of people's career journeys and in the firm.

7:15I went off and I started working on the thematic piece in ATEC. I remember coming up with something called the Global Top 10. These companies that I thought would be interesting to me. Renaissance Learning was on that top 10. And you know I was relatively new to the industry and I went to my principal at that time. He's now actually his partner in the firm and said, look, I've been doing this work and what do you think? And actually funny thing. I had reached out to a guy called Barry O'Brien, who was, I think then probably a VP at Goldman Sachs. Yes, who now runs our TMT business globally. And he put me in touch with Terry and Judy Paul, who owned the company. And I said to the guys there, well, what should I just go? And they said, sure, just go. And I was an associate in the firm. They said, just call this guy on the West Coast because it's a US thing. And so I called a guy called Brian Reader. And we went along to the meeting.

8:16It was in Denver. And one thing led to another and we ended up prosecuting that deal and taking that company private. And you know, the great thing about it for me was, and I think about it a lot with the junior talent we have in the organization, is that idea came from a junior person. It also came because that junior person was encouraged to go take that thread as far as they possibly could. It was fascinating for me because of things we did with that business. We shut down a hardware division. We transitioned the whole business model to SaaS. We entered a new country. We invested in this whole new math product. We did that all in the course of about three years and got rewarded for all of it. So it was a vignette of good stuff. So I got spoiled because I probably ended that and thought this is easy. This is how private works. And so yeah, special place in my heart that investment. And thank you to Barry. Yeah, I love the story how it originates with a call to go and sex. Yeah. I'm going to have to bury that. And Brian, the first deal with Brian. That's right.

9:16So now you share the top job of that premiere with Brian. How did that come about? And how do you split up responsibilities or look at being co-managing partners? Yes, Brian I've worked together for a long time. So actually after we did, we're learning together. Brian called me at some point and said, particularly this business called ancestry.com. And long story short, we took that company private. It made only four times the money on that investment. And in the middle of that, he said, why don't you come out to the West Coast? So I moved out to the West Coast and I worked. What year was that? That was in 2012. And I was in Armingley Park office, which is now 40 people. By the time it was four or five of us. And so I got to know Brian there and we worked together on lots of lots of deals, you know, ancestry and then many other deals together after that. So we had a long, very long working relationship. Pomer is done five leadership transitions in its 41 year history. The common themes have always been the two co-managing partners,

10:17the co-managing new co-managing partner who's been in internal promote. And the existing leadership or leader has stayed in the organization for a handful of years and been very active. So that's been very consistent in terms of the way that this leadership transition has worked. Brighton and I, as I said, we've worked together for a long time. He's based in the US, I'm best in Europe. We both grew up in tech, but he co-round tech. I went on to co-round the consumer teams. That's two of our biggest sectors. And we tend to have a co-leadership model. We like that model. I think government sex has a fair amount of co-leadership in your sectors and geographies too. It was a natural evolution a couple of years ago when Kurt moved up to executive chairman and Tom left the business. I would say the most important thing. And of course, Brighton and I, we have our splits and obviously across geography and sectors and things like that. The most important thing is we make eight to ten really important investing decisions every year.

11:18We make about eight to ten really important exit decisions every year. And less important is how we split the this and that of the organization and more important is how we come together and the investment committee comes together to make just as many well class decisions we possibly can. As I said earlier, we're a private company and most for economics are tied up in the outcomes that we drive and those decisions are the most important things we do every single year. And if we get them right, we can get a lot of the things wrong. And if we get them wrong, there's any number of things we can get right and it won't make up for it. Sounds like a very partnership and a longstanding partnership. Yeah, it's right. So as you mentioned, Premier has built dedicated sector teams and tech and consumer services and healthcare long before that was standard practice and private equity. So how does AI affect that calculus? There's a perception that a lot of private equity back companies stand be disrupted by AI. So how do you take that into account in your investment committee processes? So good things happen to good companies and bad things happen to bad companies.

12:22And we think of good companies as companies with strong modes and bad companies as companies that lack, lack modes and obviously that's a spectrum. I think what AI is doing is just accelerating those things. So if you're a business that aggregates commodity data, sells it through a commodity channel with a commodity UX, you were probably already on a decline curve and AI is going to accelerate that. And if you're company with proprietary data and with network effects and incredibly strong brand and you built a user experience, which is built for the idiosyncrasies of a vertical. Probably you're going to be on the right side of AI and you were probably succeeding anyway and AI is going to allow you to add an intelligence layer on top of what you already have and then monetize that. The private industry's probably got a mixture of good and bad companies.

13:22And I think the metric that we think about in our firm is how much of our nav is, do we feel happy about when Dario opens his mouth or when a throttic drops a model. And honestly that number was, we were figuring that out probably two or three years ago and we were probably on the defense. Today we're definitely on the offense on that and that metric is only going up into the right. But if I look out across the entire private industry, no, I don't know the stats but the reality is there is a mixture. And for sure 100% of the nav sitting in the private industry is not on the right side of AI and is not benefiting every time a new model is released. So are there specific sectors or sub sectors where you're looking to deploy capital now? Yeah, so first of all, just seeing back its it's a fascinating time to be alive. It's also very stressful and sometimes confusing time to be alive.

14:23And I always like the McKinsey analogy of you got the microscope in one hand and you got telescope in the other. When you look down the the microscope, the list of problems with the wall of warriors endless. You have government debt in this, you have potential rate high x you have more armed conflicts in the world today than anytime since second world war. You have the threat of unemployment from AI and I could go on and on and on. At the same time you've got a major platform shift, which is super early earnings and is going to reshape industries and reshape profit pools. You have energy transition where power demand is going to double over some period of time and at the same time half of the grid capacity is going to need to be retired. You have major advances in the medical field. You have a country in India, which is going to come online and try very significant growth over the next 20 years. So you've got these kind of two things in your hand at the same time. I think as a leader you've got to take a distance view of the stuff that's close up and a close view of the stuff that's far away.

15:32And that's what we try and do in the organization and just think really long term and think about our exit environment and try and skate to where the puck's going rather than where the puck is. All of those things and those big, let's call it telescope things, they'll be expressed through our sectors, I think in different ways. I think within software it's going to be about adding an intelligence layer and monetizing that over time. I think within services there will be fascinating things to do in engineering services in blue collar services in consumer. I think AI is going to radically transform personalization that will completely change and change the way that companies speak to consumers and how they get into consumers wallets, healthcare. There's something like 10,000 known diseases and only 600-ish target medicines, target drugs for those that will be major advances in those fields over time. So we like our bets, we like where we invest and we will express these big telescope type things through our sectors in different ways.

16:40But we've always found the key thing is you have to be on the right side of these big structural trends. Even if it means paying up and paying more and feeling uncomfortable when you pay up, like over the long term back to what I said around good things happen to good companies, you just tend to expose yourself to good luck when you're on the right side of these structural trends and you tend to be inundated with bad luck when you fight those things. That was a thoughtful way to analyze it. So you mentioned that you and Brian spend most of your time focusing on the most important investment decisions. You're going to make each year and the divestitures and monetizations. So what about the much talked about issue of liquidity in private equity and exit backlog that we all talk about? How do you see it and how are you managing premier through that? So look, the industry and the model, it only really works if there's about 20 to 25% DPI per annum.

17:40And the industry's not been delivering that. It's not been delivering that for coming up to a handful of years now. I think that starts probably 10-ish percent. And that can't continue if the business model is to work and flourish. So first of all, yes, I think it's problematic. We just take our data points in the last 12 months. Our status is 22%. And so we've realized 22% of our nav over the last 12 months. And we've done that through a variety of different exit routes. It's not easy, but it requires you and your organization to have the mindset that DPI is an operating rhythm. It's not an event. And frankly, and it's uncomfortable for people, but the truth is it's ancient history. The second you send the money back. You need to be focused on the next set of things that you're going to be monetizing and bring to market. We have a centralized target setting system.

18:41We have an exit committee. We drive really big accountability down the organization. We set incentives that are linked to achieving those things. But the single most important thing really is just having good companies. And it's cliche and it's easy to say, but good companies sell themselves. Bad companies just get stuck. And the single biggest reason why we've got excess liquidity over the last 12 months and last 24 months, actually, if you go back. Is actually not our processes, our incentives and our systems. It's actually that we've got businesses that are desirable. You know, their businesses that people want to own. And the reason that they want to own them is they have very long growth runways at exit. They're not overoptimized businesses. For our viewers, can you discuss what DPI is? What does it stand for? So, you know, DPI is really just money being sent back to investors. I think that's the easiest way to describe it. When we talk about percentage of nav, that's the percentage of your unrealized net asset value. And the way that we tend to look at it, and I think the industry tends to look at it, is how much money you sending back as a percentage of your unrealized net asset value that you're sitting on.

19:49That metric ought to be at 20 to 25 percent. Got it. Thank you for clarifying. So, every investment firm talks about culture. But culture is often forged and built during periods of stress. Yeah. So, how is premier's culture evolved over past market cycles? And how does it guide your decision making today? So, Lima brothers and Arthur Anderson. Two different companies, two different times, two different factors, two different faces at the top of those organizations. The common theme in those organizations was, in my view, was the same thing that led to extraordinary success for each of them, led to extraordinary downfall. So, in the case of Arthur Anderson, they had built a really strong business cross-selling consulting services into audit clients. And then that caught them out with Enron when they pushed that too far. And then, Lima wasn't a bank, it was a broker dealer, it was borrowing short, and it was investing that very aggressively on the other side.

20:54And that led to huge success over a couple of decades until it didn't. And then the question you ask yourself is, why, why was that allowed to happen? And, at least in my view, it was, you know, they're both examples of just, like, culture failing at scale. And I think if you walked around both of those companies, and I was a very junior person in both of those companies at the time, so I was nowhere near the top table, but there's a feeling you get being in organizations that doesn't matter what level you are. And I think the common themes in those organizations was probably you had charismatic leadership, you had really big growth ambitions, you had a ton of confidence. You probably also had a culture of risk taking that gone too far, sort of risky practices that were, like, normalized. You had, probably people that couldn't speak truth to power, you had incentives in the wrong place.

21:54And that would have been common between both of those companies. Yeah, those are dangerous things to have. Right. And, you know, because you've built an amazing business in Goldman Sachs, there would have been a set of things that would have led to that success and continue to propel the company forward today. But if the culture isn't one that welcomes diversity of thought, the speaking of truth to power structures that actually risk manage, any company including Goldman Sachs will run into the same problem over time. So that kind of like cultural underpinning and bounded entrepreneurialism is really important. So I think that now coming back to your question around Pamirra and culture, I think that, you know, you sort of you live your life forward, you understand it backwards. And I certainly wasn't taking notes during author Anderson or Lehman Brothers, but by Osmosis, I think those things would have impacted the way I think about culture.

22:56Pamirra is an organization and the number one thing I love about the organization is it gets better out of stress. And so I've always loved the book, Anti-Fragility, the Nassenthala book and is kind of a complicated book. But the core idea I think is quite simple and it's that there are robust systems and they tend to endure crisis and stress. And then there are anti-fragile systems that get better out of crisis and stress. And Pamirra without question has got better and much better, much faster out of peak stress moments. And I could go through a list of those moments over 40 plus years. I think the one that was most probably visible to me and I lived through and as a huge part of our history was obviously the global financial crisis. And we had a fund at that time which was full of businesses, pretty good businesses but cyclical, too much cyclicality, too much leverage. At the wrong time in the cycle, we had invested too quickly. And when the cycle turned, when I joined Pamirra, I remember sitting in a, actually Tom had put up a slide and he put the fund mark up.

24:13And I thought it was a typo. And the organisation, you know, we didn't lose anyone. The investors, the partners dug deep into their own pockets as we sort of had it down around in terms of the next fund cycle. We held the keys to our businesses. We monetised at the right time. We did some great investing in the rest of that fund, actually things like Renaissance Learning and Ancestry, a part of the part of that fund, too. That fund ended up emerging as a top quarter fund. Wow, that's spectacular. And we got better out of that. We also pivoted our strategy at that time to much higher quality businesses, resilience, growth, structural growth. And that's the core of our strategy today that we prosecute through our sectors. And so, yeah, I mean culture for me and that's the thing that I'm most focused on, probably those two things. One is not running into that Lehman, Arthur Anderson problem, right? Having the confidence to know what you do and do well and try deeper and deeper into that.

25:17And always re-evaluating first principles, whether what you're in and doing is the right thing on the one hand. And then making sure we've got an organisation that is able to not just endure but come out of stressful situations in a better place. So it's like confidence with humility. Exactly. So that culture also expresses itself beyond your portfolio. And Premier has made a significant commitment to philanthropy through its foundation. How did that initiative begin and what makes it important to the firm today? We set out the Premier Foundation 10 years ago. We back today about 35 organisations, 80% of the professionals in our organisation have donated like significant time. And our donating significant time to pro bono to these organisations. So it's really important culturally for us. We just took the decision this year to make the foundation a permanent carry holder in our funds. So we think we're one of the very few firms. Maybe the only firm that at least I know of that has done that. And that's just quite a big ask to go to partners and say,

26:24we want this foundation to be aligned with the outcomes that we drive. So yeah, it's an important thing. We thank you for asking about it because we never really get to talk about it. But it is important inside our organisation. We do talk about it. And most often we only talk about it inside our business. Yeah, well, it's showing a lot of leadership in the industry. I have not heard of anyone putting carry in their foundation. That's fantastic. So you and Brian are part of a new generation of private equity leaders. Yeah. And looking at across the industry more broadly, where do you think your generation of leaders will take private equity over the next decade? That's a great question. I mean, look, the industry is bifurcating, right? That's no secret. And you have two very distinct business models emerging. And you have people that are generally private, generally very narrow and deep in what they do. And they live or die on whether they perform or not. And there are pluses of minds as that model. And then there are firms that are building their businesses through newer, newer business lines,

27:31scaling their products. And breadth is really important to those firms. The retail channels really important to those firms. But it's like a different set of considerations. I can't speak to both. I can only really speak to what we're doing and probably what the set of people, new leadership in this part of the world that are thinking about. I'm just really excited about a really simple thing, which is building an organisation with a really distinct, investing culture. It becomes the talent magnet for people that want to be crafts people and just generating superior outcomes over the long term. And doing that consistently. And that is no mean feat. That's really hard to do. It requires just a persistent level of dissatisfaction where every single part of your business and just constantly turning stones up and asking why we can't be better and pushing and investing and thinking long term, being willing to skate to where the puck is going, not where it is today. Those things are easy to say. They're really hard to do and force yourself to do every day.

28:33But I've been with the firm 17 years. I'd love to be with the firm another 17 years. And Brian, I know feels the same way. And I think that's what we're most excited about doing. It's great. So on a personal level, you grew up in an immigrant family and watched your father scale a business from the ground up. How did that first hand look at entrepreneurship shape your world view and your approach to backing founders today? My dad became into the country and is probably mid 20s. He had a single store long story short. Scale that to about 60 stores. Wow. And really like prime locations across London. These are grocery stores. They did a very small P2P, a public private. In the middle of that, sold that business to Tesco in 2000. You found another business scale that over about 20 years. Sold that to apex France. A roll up they were doing there. And you know, 75 now when he's looking for the next thing to do.

29:36I think I was relatively kind of street smart probably from an early age just from seeing that kind of stuff ground up. I also just developed an empathy for founders. I am not a founder. And actually my dad always tells me that when ever understand what that really means to go to bed at night and having your shoulders and organization in that way. I think that's just a completely different thing. But the grit, just the sheer work ethic of just watching that is was huge. The sort of the risk taking and the calibration of that risk taking and the confidence and paranoia that takes. You know, it's stuck with me. Makes total sense. Really impressive entrepreneurial background. Yeah. It's fabulous. So I like to end these conversations with a lightning round. Yep. Just ask you some short answer questions. So what do you think your personal greatest strength is as an investor? I'd say knowing what I don't know and knowing where to get it.

30:36What was the very first investment you ever made? That was actually before Renaissance learning and another project you found when I started with it was a company called Sajem. It was a carve out from Siemens. What's the best piece of advice you've ever received? I think in the investing sphere probably I always think about the how I think it was Howard Marx phrase. The four most dangerous words in investing are this time is different. We talked about that earlier when you invest in the committee. How do you spend your time out of the office? I've got three kids 9, 11, 13 and you know, I mean this job is it's seven days a week and it's very intense. And so virtually all my time I try to spend with my wife and my kids. That's the first priority. If I'm not doing that, I love sport. I love life sport. I'm a seasoned ticket holder. I travel the length and breadth of the country and countries to follow the team and that's the most likely place you'll find me as Anne Phil.

31:41If I'm not with my family. Which investor do you admire most? I think Chris Hone probably for the way he thinks. Buffett for his temperament, probably Munger in the same breath and Howard Marx for sort of like risk management. So yeah, the standard great. Very impressive. Investors. And finally, what are you most excited about in the world right now? The whole thing. Everything we talked about. It's a great time to be alive. Anyway, Dupont, thank you so much for joining me. This is a great conversation. Thank you. Really enjoyed it. Thank you all for listening to this episode of Goldman Sachs Exchange as great investors, which was recorded on July 28th, 2026. I'm Allison Mass. If you enjoyed this show, we hope you'll follow us on Apple podcasts, Spotify or YouTube or wherever you listen to your podcasts and leave us a rating and a comment.

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