Private Equity

Private Equity supports and enhances the development of unlisted companies by making significant investments to unlock their potential.

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Discover Odyssey 2024

The business of Private Equity

2:24mn

Definition

What is Private Equity?

Private Equity funds invest in unlisted companies to accelerate their development and unlock their potential through ambitious value creation plans.

The companies we support generally have one of the following profiles:

Unlisted growth companies,

"Orphan" companies

or underdeveloped divisions of large companies

Listed companies whose share prices are undervalued

or whose growth potential could be better exploited by private shareholders.

The Private Equity model can be applied to a wide range of companies, whatever their typology, size, sector or geographical area.

There are many cases where Private Equity brings real added value, particularly when companies need to change their size, strategy or organization.

What all companies involved in these operations have in common is the existence of untapped potential, which Private Equity seeks to unlock through specific, clearly identified value-creation plans, such as external growth, internationalization, digital transformation, etc.

The companies acquired are supported for an average of 5 to 7 years, then sold with a crystallized capital gain when they are delisted from the stock market or resold to industrial groups or other funds.

Private Equity in figures

+13,4%

Average annual performance of Private Equity Growth & buyout worldwide over the last 20 years vs. 7.9% for MSCI World NR

Source: Pitchbook Report - December 2023

+21,7%

Performance of Private Equity Growth and buyout 1st quartile vs. 13.4% for the Private Equity industry average, in Growth and buyout strategies.

Source: Pitchbook Report - December 2023

0,1%

Share of private equity in the assets of individuals with more than $1 million in assets vs. +17% for family offices with more than $30 million in assets worldwide

Source: Bain analysis, Global Data, Preqin December 2023

Reasons underlying the Private Equity performance

A timeless recipe for value creation

Watch our other videos

Value creation in Private Equity

11:36 mn

The 4 Private Equity segments

The Altaroc strategy

Focus on Buyout and Growth

At Altaroc, we have chosen to focus all our ranges on Buyout and Growth.

These two segments offer the most attractive risk/return profile.

None of our portfolios will therefore include Venture Capital or Turnaround, which are the most volatile segments of Private Equity.

The four Private Equity strategies

3:38mn

How it works

What is a Private Equity fund?

In private equity, capital is invested via limited-life funds, designed to pool the amounts raised from investors and gradually deploy them in unlisted companies.

These funds are generally illiquid and require significant financial commitments, making them accessible mainly to well-informed investors.

They are managed by teams of professionals, brought together within management companies, who have an exclusive mandate to optimize investment performance.

A fund generally diversifies its portfolio by investing in 15 to 70 independent companies, in order to limit risk and maximize returns over time.

How a Private Equity fund works

How it works

What is a Private Equity fund of fund?

A fund of funds is an investment fund that invests in other investment funds. For an equivalent commitment, it offers far greater diversification than a conventional fund.

The Altaroc strategy

A solution designed for private clients and their advisors

To simplify life for our partners and their clients, we make:

- 2 capital calls per year, with fixed dates and amounts, from the second year.
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At Altaroc, subscribing to all our ranges is 100% digital and takes just a few minutes.

Our partners, like our investors, have a dedicated space to ensure real-time monitoring of the life of their investment.

Why Altaroc?

5:07mn

Private Equity management fees

Management fees cover all functions necessary for the proper management of the fund throughout its lifetime.

They are calculated on bases or with rates that vary according to the period:

During the fund's investment period: the calculation base corresponds to the amount subscribed by investors, to which a rate ranging from 1.5% for funds over €3 billion to 2% for funds under €1 billion is applied,

For the post-investment period up to the fund's termination, there are two possibilities:
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Option 1: the calculation base remains the amount subscribed by investors to which a degressive rate is applied,

Option 2: the calculation is made on the capital invested (net of divestments) with a rate identical to or lower than that applied during the fund's investment period.

In addition to these management fees:

Specific fund operating costs (mainly set-up costs, legal and administrative fees, costs of unsuccessful transactions),

Transaction and monitoring fees for portfolio companies,

Carried interest is defined as the profit-sharing of the Private Equity fund management company's teams, based on its performance.

Private Equity fund of funds management fees

Funds of funds incur costs on two levels:

Direct costs, which are much lower than those of direct investment funds. These include management fees and operating costs such as management fees, statutory auditors' fees, legal fees, custodian fees, etc.,

Indirect costs, which are those incurred by the funds in which the fund of funds has invested.

The Altaroc strategy

Transparent pricing for a global turnkey Private Equity portfolio.

Altaroc management fees are degressive, ranging from 1.65% to 2.5% depending on the amount subscribed.
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Management fees for portfolio funds and co-investments amount to 1. 3% for the customer Altaroc.

Thus, for the smallest commitments the customer Altaroc pays consolidated fees of 3.8%.

In addition to these fees, performance fees on the co-investment portion of the Odyssey and Discovery portfolios amount to 20% of realized capital gains.