Introducing the Vintage Altaroc Odyssey FPCI

Louis Flamand: We're launching Odyssey 2025 with even greater conviction, as the private equity market recovers. In this new Vintage, you'll find the main themes that make Altarocs offering so strong. Institutionalized managers meeting allAltaroc 's selection criteria: deep track record, high and consistent historical performance, low loss ratio, proven ability to create value through strong operational growth of their portfolio companies and low financial leverage. Stable, institutionalized organizations, rich in human resources, with strong in-house sectoral and operational expertise.

A portfolio comprising seven funds managed by six fund managers: Insight Partners , Great Hill Partners IX, Hg IV and HG V, New Mountain Strategic Equity Fund II, Inflexion VI, and Nordic Capital . This universe was built around recurring, long-term investment themes: 1. a high-growth strategy primarily in the technology and software sectors with Insight Partners, Great Hill Partners, or Hg. 2. Lower Mid-Market funds benefiting from their affiliation with high-quality Large Cap platforms, giving them a competitive advantage in the lower end of the Mid-Market through access to strong internal, operational, or sector-specific resources with Hg or New Mountain Strategic Equity Fund II, and finally leading buyout firms such as Inflexion Nordic Capital. The only expected change is a slight increase in software and a slight decrease in healthcare.

Louis Flamand: Our portfolios have historically maintained significant exposure to healthcare, a sector appreciated for its resilience and long-term growth potential. However, the availability of specialized funds that meet our exacting standards has led us to adjust our approach and adopt greater flexibility. The market for private equity managers specializing in healthcare remains small, and few new players meet all our investment criteria. We have therefore adjusted our target exposure to a range of 10-20%, compared with our initial target of 20%. This does not call into question our commitment to leading funds already present in our past portfolios. At the same time, we have strengthened our allocation to software. This rebalancing is based on a number of fundamental factors: the large number of specialized managers meeting all our demanding Altaroc selection criteria, sustainable structural trends driven by the adoption of the recurring SaaS subscription model, the transition to the cloud, the rise of cash flow visibility and the ability of companies in the sector to maintain high growth. The services sector, facilitated by Technology Enabled Services, is now impacting all sectors of the economy. As a result, our target allocation to technology-enabled software and services is now between 50 and 60%, reflecting the sector's strong appeal and the large number of high-quality managers specializing in it.

Louis Flamand: With Odyssey 2025, we're moving into Vintage Re-Up or re-engagement.

Louis Flamand: We are continuing our commitments to leading managers with whom we have already invested in our Vintage . As such, five of the six managers in our selection universe are already part of our portfolio: Insight Partners Nordic Capital are managers in Altaroc Odyssey ; Hg is in Altaroc Odyssey ; and New Mountain and Inflexion are managers already in Altaroc Odyssey . When launching a fifth Vintage, it is natural for a fund of funds to invest in the successor funds of its existing portfolio managers. However, it should be noted that underperformance is not the only reason for deciding not to reinvest in a Fund manager successor fund. Other reasons may include: the successor fund is too large and will lead to a change in strategy; a leadership succession issue at the firm; the loss of one or more key partners, which will impact the performance of future investments; or the manager is performing well, but one of their competitors is performing significantly better. When we commit to a fund, that is not the end of our due diligence—quite the contrary. We monitor each of our portfolio managers very closely: attending their general meetings, holding regular conversations and meetings, and analyzing investment opportunities alongside them. We constantly evaluate them and compare them with their top-performing competitors, who make up our shadow portfolio.

Louis Flamand: A simulated, parallel portfolio comprising the managers most likely to eventually join our portfolio as new managers or to replace existing ones. A Re-Up is therefore truly the result of due diligence just as thorough as when we add a new Fund manager our portfolio, as it involves a very detailed comparison between the opportunity to re-engage with an Fund manager and the opportunity to replace them with a Fund manager our shadow portfolio. We have already made two significant commitments for Odyssey . First, $52 million in Insight Partners , a growth equity buyout fund buyout on the software sector that has already begun investing. This is good news for the deployment pace of this new Vintage. This commitment is split between the main fund, Insight Partners ($42 million), and its companion fund, Insight Growth Buyout Fund XIII ($10 million). This companion fund invests alongside Insight Partners LBO in its LBO transactions and benefits from attractive financial terms. Management fees are charged on the amounts invested throughout the fund’s lifetime. Insight Partners primarily invests in growth equity in hyper-growth software companies valued at a multiple of revenue, as these companies are investing in their growth and their profitability is therefore not yet optimized. Valuations for these hyper-growth software companies peaked at 18 times forward 12-month revenue during the 2021 sector bubble but have since fallen to an average of six times forward 12-month revenue.

Louis Flamand: A level we hadn’t seen in over fifteen years, making it an attractive entry point for Insight Partners . Second investment: €60 million in Hg IV. A LBO fund focused on the software sector. The fund will invest primarily in Europe and North America. We have made four investments alongside the Hg III fund, and we will likely also invest alongside Hg IV. Hg one of our largest clients.

Louis Flamand: In addition, we are conducting advanced due diligence on Great Hill Partners, a Fund manager .S Fund manager growth equity and buyout Fund manager whom I have known for many years and whose past performance has been exceptional, achieved with minimal leverage. The average net performance of Great Hill’s most recent mature funds—Fund IV ( Vintage ), Fund V ( Vintage ), and Fund VI ( Vintage )—is 3.1x the investment and a 31% IRR of all fees. Finally, we are also currently reviewing the New Mountain Strategic Equity Fund II, a mid-market fund with a $1 billion buyout size managed by the same team currently investing New Mountain VII, which is anAltaroc Odyssey fund.

Louis Flamand: High-quality companies looking for a majority partner are housed in New Mountain VI. Companies led by founders looking for a minority partner are housed in this fund: New Mountain Strategic Equity Fund II. The strategy of this fund is very similar to that ofInflexion Partnership Capital III, which we supported in Odyssey 2023.

Louis Flamand: In conclusion, we can say that the seven funds comprising our advanced selection universe for this Vintage a well-balanced portfolio in terms of geography, with a near-perfect balance between Europe and North America, and in terms of deal size. By sector, with a margin of plus or minus 5%, we are perfectly in line with our target allocation of 50% to 60% in the technology sector—primarily the software sector—10% to 20% in the healthcare sector, 20% in the services sector, and 10% in the consumer sector. This investment universe provides this sector exposure through funds specializing in their target sectors, by number of investments—with up to 170 underlying investments across this fund portfolio—and by transaction type, including buyout, growth equity, and even buyout via New Mountain Strategic Equity. One of the key commonalities among these seven funds is that the primary source of their value creation is the strong operational growth of their portfolio companies, rather than debt, which is their weakest lever for value creation.

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