Private Equity and its role in building a wealth management strategy

Private Equity allows investors to invest in unlisted companies with specialized managers aiming for high returns by supporting fast-growing, well-managed businesses. Unlike the stock market, where judgement is quarterly, Private Equity offers an investment horizon of 5 to 7 years to develop and execute a business plan.

Private Equity is a sector that manages investments in unlisted companies on behalf of mainly institutional capital, having expanded worldwide with over 4,000 management companies and more than $5,000 billion under management. Known as the best-performing asset class over the long term, average annual returns are between 10% and 15%, with some funds exceeding 20%.

Private Equity encompasses a range of investment strategies in unlisted companies, from venture capital for start-ups to turnaround funds for distressed companies, with varying risk and liquidity profiles. Growth capital and LBO funds target more mature companies and offer a more attractive risk/return balance, while turnaround funds operate in more complex and risky situations.

Private Equity creates value through levers such as active governance, alignment of interests, external growth and long-term investment, with proven operational strategies. These levers enable high returns to be generated through organic growth, improved operating margins, the use of financial levers, multiple revaluation and consolidation strategies, moving away from pure financial engineering to focus on concrete, long-term industrial development.

Louis Flamand explains that the major risk in Private Equity is team risk. To minimize this risk, Altaroc invests in large funds, with large teams, and ensures that these teams are cohesive and committed to a common vision, while at the same time ensuring fairness in the sharing of interests and the financial involvement of key members alongside investors.

Louis Flamand, our Chief Investment Officer, explains the phenomenon of the famous J-curve.

Frédéric Stolar explains that, in Private Equity, there is no market timing as such, as investments are spread over five years and exits are similar, smoothing out entry and exit points. It's the managers who decide when to buy and sell companies.

The Altaroc offer features a Private Equity investment strategy through vintage funds of funds, providing balanced exposure by investing each year, despite the challenges of rigorously selecting 5 to 7 exceptional funds per year.

Private Equity has historically outperformed listed markets thanks in particular to better profitability, reduced volatility and a unique alignment of interests between investors and management. Its investment universe is 20 times larger than that of listed markets, offering exclusive opportunities. Discover why this asset class is a must-have for any diversified portfolio.

Private Equity escapes the vagaries of market timing thanks to a long-term investment horizon (7 to 10 years) and a gradual deployment strategy. By investing regularly, you optimize your diversification and reduce the risks associated with economic cycles. Find out why this approach is adopted by the largest institutional investors.