Private Equity glossary

Leverage is a mechanism used to study the appropriateness of taking on debt to make an investment.

It studies the expected profitability between the cost generated by the investment and the expected (or actual) profitability of an investment.

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The Distribution to Paid-In ratio is used to measure a fund's performance. It is the ratio of capital actually returned by a fund to its investors.

DPI =Sum of distributions received by investors at time t divided by Paid-in Capital (the sum of capital calls at time t).

DPI does depend on actual cash flows, so it's a performance achieved net of expenses.

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Which came into force on March 10, 2021, it is a European regulation that aims to provide a framework for the integration of ESG (Environmental, Social and Governance) issues by financial players at several levels.
This new regulation aims to provide a framework for finance in an environmental and sustainable transition.

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Generic name of a company born from a spin-off, start-up or subsidiaries, before its final name is assigned.

This is the amount that has been invested by the fund through funds and co-investments.

This is the capital that has been allocated to the underlying funds.

In the corporate world, a unicorn is a startup valued at more than $1 billion.

It represents the performance-based incentive that goes to the teams of management companies. As a general rule, it corresponds to 20% of the capital gains generated by the fund.

A build-up is an external growth strategy based on the acquisition of companies in the same sector (often competitors), with the aim of creating industrial synergies.

Applying Private Equity's support methods to the charitable world, Venture Philanthropy consists of selecting the best social actors and supporting them over the long term by providing them with the financing and skills support they need to scale up and relaunch the social ladder.

Net Present Value - Synonym: present value

Sum of future cash flows / (1 + Discount rate)^n

Example calculation: A flow of 100 EUR due in 2 years and with a required annual return of 5% would have a present value of 100 / (1.05) ^ 2 = 90.70 EUR

TPI (Total Value to Paid In) is an indicator that measures the ratio between the amounts already paid to investors and the estimated value of the portfolio, divided by the total amount paid by investors.

If the IPST is greater than 1, it means that the fund is in a capital gains position. On the other hand, if the IPTV is less than 1, it indicates that the fund has not yet created value.

IPST is broken down into IPST = IPR + IPVR or Distributions Paid + Estimated Portfolio Value.

IRR refers to the average Internal Rate of Return (IRR) calculated over the history of the investment portfolio. IRR is a measure of an investment's performance that takes into account incoming and outgoing cash flows, as well as the timing of these cash flows.

The internal rate of return is the discount rate that makes the net present value (NPV) of all future cash flows of a project/investment equal to zero.

The Principles for Responsible Investment were launched by a group of institutional investors in response to the growing importance of environmental, social and governance issues. Sponsored by the UN, this initiative brings together nearly 5,000 financial institutions working together to implement its six ambitious principles for responsible investment. Altaroc Partners has been a PRI signatory since 2021.
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Corresponds to the top 25% of global funds

Debt-free performance can be more stable, as it is not affected by interest and debt repayments. However, it also means that the company or fund is more dependent on its own financial resources to finance its operations and investments.

The Plan d'Epargne Retraite (PER) is a savings product designed to build up capital for retirement. It offers tax advantages, enabling savers to deduct their payments from their taxable income. The PER can be funded by voluntary contributions and compulsory contributions, and the accumulated savings are available on retirement in the form of an annuity or a lump sum, depending on the terms chosen.

All property, assets and rights held by a person or entity. This can include real estate such as houses, land, buildings, movable property such as cars, works of art, collections, financial assets such as stocks, bonds, bank accounts, real estate investments, as well as rights such as contracts, patents, copyrights, etc. Wealth can be assessed in terms of financial value, but it can also have sentimental or historical value.

NASDAQ is an American stock exchange specializing in technology and growth stocks. It is considered the second largest stock exchange in the United States in terms of market capitalization, after the New York Stock Exchange (NYSE).

The Net Multiple is an indicator that measures the return on an investment by comparing the amount of the exit (the proceeds from the sale of assets) with the amount of the initial investment. A Multiple of 2.65 means that the investment has generated a return of 2.65 times the initial amount invested.

Mergers and Acquisitions refers to a set of financial transactions in which one company acquires or merges with another.

An asset class in the field of Private Equity. It is for investments in fast-growing companies, typically with an annual growth rate of more than 30%. These businesses are often profitable, but not always. Growth Equity focuses on companies with a proven business model and the potential to accelerate their growth. Unlike Venture Capital, Growth Equity is not interested in start-ups or high-risk technology companies. Rather, it is intended to support established companies in their expansion and to assist in the execution of their growth plan.

Environment, Social, Governance.

An ESG approach is one that considers environmental, social and governance issues.

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(Earnings Before Interest, Taxes, Depreciation, and Amortization) A financial indicator measuring a company's operating profits before deduction of financial expenses, taxes, depreciation and provisions.

(Discounted Cash Flow) A business valuation method that involves estimating the present value of future cash flows that the company will generate. It is based on the principle of discounting, which brings the value of future cash flows down to today's date. DCF valuation is considered an intrinsic method, as it is based on the company's ability to generate a cash flow.

Wealth Management Advisor

Assurance Vie Luxembourgeoise refers to life insurance policies established in Luxembourg. These contracts are often chosen for the tax advantages and wealth management opportunities offered by Luxembourg legislation. They are prized for their flexibility, legal certainty and widespread use in estate planning.

The Autorité des marchés financiers (AMF) is an independent French institution responsible for regulating and overseeing the financial markets. Its main role is to ensure investor protection, market transparency and smooth operation. The AMF issues rules and recommendations, authorizes and monitors financial market players, and intervenes in the event of infringements to ensure the integrity of the financial system in France.