Why waiting is not a winning strategy
Summary
Written transcription
Louis Flamand: One idea often comes up in our discussions with our partners: "I prefer to wait and see how the first Vintage products perform before offering Altaroc products to my customers."
Louis Flamand: It may sound legitimate, but in private equity, this approach could mean missing out on major opportunities for both you and your clients. Investing in private equity means investing for the long term, seeking exposure to each Vintage in order to build a diversified portfolio by delaying investment. Your clients are limiting their exposure to different cycles, which could compromise their long-term performance. As a result, they could be missing out on some very good Vintage right now. The sharp rise in interest rates in 2022 has led to a drop in valuation multiples. Yet we know empirically that Vintage that follow years of declining valuations are often the best Vintage. We already have tangible evidence of the high performance potential of our Vintage. Firstly, all our Vintage are made up of 5 to 7 managers with deep, proven track records. Each manager has already demonstrated its ability to generate consistently high performance over 20 years, with a low loss rate. With 5 to 7 managers of this quality per Vintage Altaroc. That's between 100 and 140 years of track-record. It's hard to find better historical visibility. It's also worth noting that we are investors in a number of funds to which the largest institutional investors don't even have access.
Louis Flamand: Secondly, our current Vintage are already showing promising performances. The gross IRR of our Vintage 2021 and 2022 was already 15% at September 30, 2024. An excellent industry performance for young portfolios that have yet to fully reap the rewards of our managers' ambitious value creation plans.Altaroc 's success also rests on its investment team, made up of highly experienced professionals. Our co-founders, Maurice and Frédéric, bring their expertise as former founders and managers of some of the industry's leading funds. Maurice brought the private equity industry to France and co-founded Apax and Altamir. Frédéric co-founded and managed the Sagard fund for over 20 years. For my part, I have over 17 years' experience in private equity fund selection. In London, I co-led the private equity fund selection team for UBS private clients, managing an $8 billion portfolio. I also managed private equity activities in Europe and Asia, and was a member of the investment committee of Metlife, one of the world's largest life insurers, with $20 billion of private equity exposure. Finally, our alignment of interests with our investors is particularly strong. Maurice and Frédéric personally invest €33 million every year in Vintage Altaroc. They don't have to. They do it because they're convinced it's the best use of their own capital. That's a lot of arguments, which I hope will convince you to become anAltaroc partner.
Louis Flamand: With Altaroc, your customers benefit from a unique ecosystem combining human and technological expertise. First of all, a vintage product offering access to institutional-quality private equity, with 80% of the portfolio allocated to funds invested by managers who are among the world's best in terms of the depth, consistency and quality of their track-records, 20% in co-investments alongside our managers, so as to overexpose ourselves to their sectors of greatest expertise, with a target return net of all fees of 1.7x the stake, or rather 1.88x the amount of your clients' net disbursements over five years. As you can see on the screen, if a customer commits €100,000 to one of our Vintage, he should receive €20,000 in distributions before he has disbursed his entire commitment, so that his net disbursement will only be €80,000. In our base case, he will receive €150,000, or 1.88x his stake. Secondly, this vintage product is the building block from which Altaroc can offer long-term private equity investment programs to meet your clients' diverse wealth objectives. By committing to several Vintage, your clients will reduce their risk through better diversification, and can also improve their long-term performance by putting their capital to work more efficiently, for example by financing the capital calls of the later Vintage with distributions from the earlier ones.
Louis Flamand: As you can see on the screen, a customer who commits to allAltaroc Vintage to the tune of €100,000 would only have to disburse €310,000 in six years, i.e. around three times his perpetual annual commitment, and receive an average annual recurring income of €70,000 gross of tax from year 10 onwards. But if he doesn't need recurring income from year 10 onwards, he could also increase his annual commitment level to be able to effectively reinvest the distributions he receives and boost his performance even further. A very attractive strategy for a client looking to build long-term wealth. Thirdly, Altaroc also offers a technological platform that is revolutionizing the private equity offering for private clients. Simplified underwriting, predictable fund calls and detailed institutional reporting, real-time monitoring of underlyings keeping investors informed and confident. And finally, Altaroc. It's also about human and strategic support. A team of dedicated experts available to train your advisors, answer your questions and support your customers in their investment decisions. A marketing and technology team that provides tools, educational content and regular events to facilitate the adoption of Private Equity by your employees and customers.
Louis Flamand: In conclusion, why do you suggest that your clients invest in private equity with Altaroc today? The outperformance of private equity makes it an unavoidable asset class today, especially in the current economic climate.
Louis Flamand: Altaroc is still a young company. But nobody before us had thought of creating this concept of a vintage fund of funds of institutional quality accessible from €100,000. You can wait untilAltaroc is 20 years old, but you'll miss out on 20 years of private equity performance. If you wait for the results of our first Vintage, you risk missing out on some very good Vintage by investing alongside some of the world's best managers with over 20 years of track-record, selected by our investment team with over 100 years of combined investment experience. We are convinced of the high performance potential of our Vintage funds. This conviction is reflected in the significant personal investment of our 2 co-founders, which guarantees a particularly strong alignment of interests with our customers. The portfolios of our first Vintage are already showing promising operational performance, with many levers for value creation still to be activated. With Altaroc, you offer your customers a solution designed to perform over the long term thanks to: firstly, unrivalled expertise embodied by two co-founders and an experienced investment team. And secondly, a digital and human ecosystem that simplifies and enhances the customer experience. Become an Altaroc partner today and give your customers the opportunity to build portfolios that combine diversification, performance and simplicity.
