Inside Private Equity - 29 May 2024 broadcast

The episode explains how to measure the performance of a private equity fund using three key indicators: IRR, which measures annualized return; TVPI, which measures the total multiple of the investment; and DPI, which measures the capital already effectively returned to investors. Frédéric Stolar notes that the “gold standard” for top-performing funds is around a 20% IRR and 2x the investment, while highlighting two major risks: illiquidity and the performance gap between top funds and the rest.The program then features the testimony of Jean-Matthieu Biseau, CEO of Opteven, a European specialist in automotive services and warranties. He explains how private equity supported the transformation of a small regional subsidiary into a European leader, with over 1,000 employees and approximately €300 million in revenue. His experience underscores the importance of choosing a fund not only for its capital but also for its ability to support growth, acquisitions, international expansion, and strategic decisions. Karim Boueiz then introduces General Atlantic, a global pioneer in growth equity, with a highly diversified investor base historically dominated by family offices. He describes a global, flexible, and thematic strategy focused on growth, technology, financial services, consumer goods, climate, and life sciences. He also notes that the current market environment, despite geopolitical volatility, inflation, and high interest rates, may present an attractive window for investment. Dimitri Bernard analyzes performance disparities across geographic regions. The United States has historically posted the best performance, ahead of Europe and then Asia, mainly due to a more mature ecosystem, an entrepreneurial culture more favorable to private equity, greater market depth, and a larger number of specialized funds. Europe remains attractive, while Asia still suffers from a younger ecosystem and, at times, greater regulatory instability. Finally, Jérôme Souied, a partner at Kearney, details the role of strategy consulting for funds: due diligence, business plan validation, value creation plans, operational support, and exit preparation. He emphasizes current areas of focus, particularly the sustainability of margins, pricing power, and companies’ ability to maintain their competitive position in a more uncertain environment. In summary: this episode shows that private equity performance depends as much on selecting the right funds as on the quality of the portfolio companies, their growth potential, investment discipline, and the ability to create long-term value.