Understanding Private Equity
Private Equity supports and enhances the development of unlisted companies by making significant investments to unlock their potential.
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.
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
+14,5%
Average annual performance of Private Equity worldwide over the past 20 years
Source: Pitchbook Report - December 2023
+12,2%
Average annual performance of Private Equity in France between 2007 and 2021 vs. 5.1% for the CAC 40
0,01%
Private Equity's share of French assets vs. 17% for family offices worldwide
Source: Bain analysis, Global Data, Preqin December 2023 and France Invest Report Rendre le capital-investissement accessible September 2022
Reasons underlying the Private Equity performance
A timeless recipe for value creation
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.
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.
How it works
What is a Private Equity fund?
In Private Equity, capital is invested via limited-life funds: FPCIs in France, or Limited Partnerships in the English-speaking world.
These vehicles house the funds raised from investors, and gradually deploy them in the companies acquired.
FPCIs are illiquid, and require high minimum investment thresholds for investors.
Funds are managed by teams of professionals within management companies with an exclusive advisory mandate for the funds.
On average, a fund invests in 15 to 70 companies, completely independent of each other.
These vehicles house the funds raised from investors, and gradually deploy them in the companies acquired.
FPCIs are illiquid, and require high minimum investment thresholds for investors.
Funds are managed by teams of professionals within management companies with an exclusive advisory mandate for the funds.
On average, a fund invests in 15 to 70 companies, completely independent of each other.
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.
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.
- 2 capital calls per year, with fixed dates and amounts, from the second year.
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:
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:
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.
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 's management fees are degressive, ranging from 1.65% to 2.5% depending on the amount subscribed.
Management fees for portfolio funds and co-investments amount to just 1.3% for the Altaroc customer.
Thus, for the smallest commitments the Altaroc customer pays consolidated fees of up to 3.8%.
To these fees are added performance fees on the co-investment portion of the Odyssey and Discovery portfolios, which amount to 20% of realized capital gains.
Management fees for portfolio funds and co-investments amount to just 1.3% for the Altaroc customer.
Thus, for the smallest commitments the Altaroc customer pays consolidated fees of up to 3.8%.
To these fees are added performance fees on the co-investment portion of the Odyssey and Discovery portfolios, which amount to 20% of realized capital gains.
The Altaroc offer
5:10mn
The Altaroc offer
Discover our Private Equity ranges
Private Equity
Discovery
Institutional-quality Private Equity now available in French life insurance and PER - Assurance.
Minimum commitment
Amount defined by the insurer
Format
FCPR (venture capital fund) regulated by the AMF
Subscribers
Individuals
Private Equity
Odyssey
Every year, we build a highly diversified, high-performance, turnkey global Private Equity portfolio.
MINIMUM COMMITMENT
From €100,000
Format
Subscribers
Sophisticated retail or institutional investors
Private Equity
Infinity
Invest in private equity like the biggest institutional investors
A multi-million-dollar global private equity offering is in the pipeline.
Available soon
minimum commitment
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Format
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Subscribers
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Private Equity news
FAQ
What is Private Equity?
How do you explain the performance of Private Equity?
What are the risks of investing in Private Equity?
