Inside Private Equity - Issue of January 29, 2025

In this 9th episode of Inside Private Equity, the show addresses a key question for any investor: what percentage of their portfolio should be allocated to private equity? Frédéric Stolar offers a nuanced answer based on the practices of institutional investors. On average, these investors allocate between 20% and 30% of their assets to this asset class, with variations depending on their type (pension funds, sovereign wealth funds, family offices). However, for an individual, the right allocation depends above all on their personal situation: investment horizon, liquidity needs, and overall asset mix. Since private equity is inherently illiquid and a long-term investment, it should be reserved for the “long-term” portion of one’s portfolio. The success story of the TOM Group perfectly illustrates the value creation enabled by private equity. This European leader in the jewelry industry successfully transformed itself thanks to financial partners who provided speed of execution, financial engineering, and strategic confidence. Maurice Tchenio points out that the role of private equity is not merely financial: it consists of making companies stronger, more profitable, and more attractive over the long term, particularly through improvements in governance, the customer experience, and growth drivers. The program also highlights the practices of institutional investors, who invest in a disciplined manner each year without attempting to “time” the market. This strategy helps smooth out economic cycles and capture the overall performance of private equity. However, managing exposure remains complex, particularly due to market effects (denominator and numerator effects) and valuation fluctuations. Finally, a wealth management advisor’s testimony highlights the gradual democratization of private equity among individual investors. Thanks to new, more accessible (starting at €100,000) and diversified solutions, private investors can now access this asset class and become more involved in the real economy. The advisor’s role then becomes essential in guiding this allocation, explaining the risks, and structuring a tailored strategy.