Private equity, a strategic lever to support the growth of unlisted companies
On this page, we offer you an in-depth immersion into the world of private equity. You'll find detailed analyses of the fundamental principles of private equity, and a presentation of the different segments that make it up - from venture capital for young, innovative companies, through buyout and distressed capital for companies in difficulty, to expansion capital for fast-growing companies.
We also highlight the key players in this ecosystem: management companies, institutional investors, family offices and other key players who shape this dynamic market.
Finally, you'll discover how to invest optimally in private equity: its distinctive advantages for private investors, the performance levers it offers, and the tailored investment solutions offered by Altaroc to maximize your returns. Whether you're a novice or an experienced investor, this page will help you step by step to understand, analyze and seize the opportunities offered by Private Equity.
Private equity: definition, principles and risks
What is private equity?
Private equity is a strategy for allocating capital to unlisted companies. The main objective is to finance their growth, transformation or turnaround. Unlike traditional investments, private equity offers investors the opportunity to become actively involved in the strategic development of companies, often over the long term, with the ultimate aim of realizing a significant capital gain on the sale of holdings.
However, this asset class carries specific risks. The absence of a public listing reduces the liquidity of investments, making resale more complex. What's more, performance is not guaranteed: the companies financed may not achieve their objectives, or may even fail, resulting in partial or total loss of the capital invested.
In France, the term private equity is commonly translated as capital-investissement. This expression accurately reflects the activity of investing in unlisted companies, in order to support their development, expansion or restructuring. Although the two terms are interchangeable, English is still frequently used in international financial circles, while the French term is preferred in regulatory and institutional contexts.
Differences between private equity and stock market investment
There are several key differences between private equity and stock market investing:
- Private Equity: Investment in unlisted companies, often in the growth, transfer or turnaround phase.
- Stock market: Acquisition of shares in companies listed on public markets.
- Private Equity: Investments are generally illiquid, with an investment horizon of 5 to 10 years before exit.
- Stock market: shares can be bought and sold easily, offering immediate liquidity.
- Private equity: investors (funds) often play an active role in company management and strategy, through board seats or operational decisions.
- Stock market: Investors have limited influence on the governance of listed companies.
- Private Equity: offers less accessible but potentially more lucrative investment opportunities, in return for higher risk and a long-term commitment.
This type of investment entails significant risks linked to performance volatility, economic conditions and company-specific factors.
- Stock market: More moderate returns, but easier risk management thanks to asset liquidity . However, public markets are still subject to sometimes significant fluctuations due to economic or geopolitical factors.
Risks associated with private equity
Investing in private equity can offer attractive returns, but it comes with several risks that should not be overlooked:
Not all financed companies succeed. Some may run into financial difficulties, resulting in partial or total loss of the investment.
Unlike listed shares, private equity units cannot be easily resold. The investment horizon is generally 5 to 10 years, requiring considerable patience and the ability to tie up funds over the long term.
Private equity investors may be exposed to a limited number of companies, which increases the risk of underperformance by one or more of them.
The active involvement of investors in company management can be an asset, but it also exposes them to risks associated with inappropriate strategic decisions or management errors.
The 4 Private Equity segments
Venture Capital: Financing early-stage innovation
Growth Capital: Accelerating the growth of established companies
Leveraged buyout (LBO): acquiring companies through leverage
Turnaround: turning ailing companies around to create value
Private Equity in figures
Altaroc 's investment strategy: Focus on Buyout and Growth Capital
ChezAltarocwe have made the strategic choice to focus our entire investment range on two key private equity segments: Buyout and Growth Capital, both of which offer the best balance between risk and return, providing attractive investment opportunities for our clients.
This rigorous selection reflects our commitment to offering our investors high-performance, controlled solutions aligned with strategies for sustainable growth and long-term value creation.
Major private equity players
General Partners (GPs): A strategic pillar of private equity
Limited Partners (LPs): Private equity capital providers
Unlisted companies: beneficiaries of private equity investments
The different vehicles for investing in private equity
What is a Private Equity fund?
In private equity, capital is invested through funds with a limited lifespan, generally between 8 and 12 years. These funds are designed to pool amounts raised from institutional investors, family offices or sophisticated investors, and gradually deploy them in unlisted companies with strong growth or transformation potential.
These funds are by nature illiquid, involving substantial financial commitments and long-term capital lock-in. Because of these characteristics, they are mainly accessible to qualified investors able to bear higher risks and longer investment horizons.
These funds are managed by teams of experienced professionals within General Partners (GPs ). They have an exclusive mandate to identify investment opportunities, support portfolio companies and optimize the performance of assets until they are sold.
To limit risk and maximize returns, a private equity fund generally adopts a diversification strategy. It invests in a portfolio of 15 to 70 independent companies, spread across different sectors, geographical areas and stages of development. This approach balances the fund's overall performance, offsetting any underperformance with the success of the best-performing companies.
How a Private Equity fund works
What is a private equity fund of funds?
Definition of a fund of funds
A private equity fund of funds is an investment vehicle that does not directly finance unlisted companies, but invests in a selection of private equity funds managed by different General Partners (GPs). This structure gives investors access, via a single vehicle, to broader geographical, sectoral and strategic diversification than if they were investing in a single fund.
The fund-of-funds strategy aims to reduce the risks associated with the individual performance of the underlying funds, while enabling investors to enter markets that are often inaccessible directly, due to the minimum amounts required or the selectivity of the funds. By combining several funds into a single portfolio, a fund of funds offers exposure to a variety of asset classes and strategies (Buyout, Growth, Venture, etc.).
The objectives of a private equity fund of funds
The main objectives of a fund of funds are as follows:
Private equity fund of funds management fees
Direct costs:
These costs are directly linked to the management of the fund of funds itself. Although they are generally lower than those of funds investing directly, they include :
- Management fees, which remunerate the team for selecting and monitoring the underlying funds,
- Operating expenses such as statutory auditors' fees, legal fees, custodian costs and other administrative expenses.
These fees cover the operational management of the investment vehicle and the supervision of the funds in which it invests.
Indirect costs :
In addition to direct costs, investors bear the fees charged by the underlying funds in which the fund of funds has invested. These costs also include management fees and carried interests charged by the General Partners (GPs) of the selected private equity funds.
Why invest in private equity as an individual?
Why is private equity attractive to individuals?
How can private individuals gain access to private equity?
-2 calls for funds per year, with fixed dates and amounts, from the second year onwards, enabling better visibility and financial planning for our investors.
- A 100% digital subscription to all our ranges, achievable in just a few minutes, for quick and easy access to Private Equity.
Our partners and investors have a dedicated personal space, offering real-time monitoring of their investments, performance and news related to their portfolios. This platform guarantees total transparency and ongoing support throughout the investment process.
Private equity trends and outlook
Reasons underlying the Private Equity performance
Management fees for portfolio funds and co-investments amount to 1.3% for the Altaroc customer.
Thus, for the smallest commitments the Altaroc customer pays consolidated fees of 3.8%.
In addition to these fees, performance fees on the co-investment portion of the Odyssey and Altalife portfolios amount to 20% of realized capital gains.
Discovery is a range dedicated to investors wishing to discover private equity within a structured and accessible framework. It offers simple exposure to this asset class, thanks to an accessible structure, a rigorous selection process and adapted accessibility, notably via life insurance.
Odyssey is a range of private equity investments starting from €100,000. Each year, it offers a turnkey portfolio, combining geographical and sector diversification, a selection of top-tier managers and a commitment to performance.
Infinity is a range dedicated to institutional investors and large estates. It offers a turnkey solution for building an international private equity portfolio, with structured, diversified access based on institutional standards.
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How can private individuals gain access to private equity?
Online platforms dedicated to private equity offer investment solutions accessible to individual investors. These platforms enable investors to select projects or funds according to specific criteria (sectors, geographies, strategies), and facilitate subscription through digitized processes.
Some fund management companies offer funds specially designed for non-professional investors, with lower entry fees than institutional funds. These funds are often structured to offer diversification and professional management tailored to the needs of retail investors.
Private equity is increasingly integrated into life insurance policies and structured financial products, giving individuals access to these assets while enjoying a degree of flexibility in terms of taxation and liquidity.