Making private equity accessible
Summary
Written transcription
Eliott Vincent: So, with all that you've just mentioned, how do you explain the fact that today's private, individual investor has so little exposure to this asset class, when in fact it's where he or she can go in search of high returns to build up substantial financial wealth by using this pocket as a portfolio fund.
Dimitri Bernard: There are lots of reasons. I'm not going to mention them all, but the first is the minimum investment ticket in private equity funds. Without going through players like Altaroc, you normally have to invest fairly substantial amounts. In other words, the funds in which we invest are sometimes in the range of 10, 15, 20 million euros. It's true that some people will tell us that the tickets are lower. This is true for some funds, but not for the international funds that meet our selection criteria. So, this amount is far too high. It's the historical amount to invest in private equity funds. It's too high for a private client, especially when he wants to diversify and build a portfolio made up of several funds.
Eliott Vincent: He doesn't necessarily have access to knowledge either.
Dimitri Bernard: He doesn't necessarily know about these funds. You're right. So we've reduced this ticket to €100,000 for the Altaroc Odyssey range of funds, which offers five to six private equity funds each year with, let's say, six to eight years of co-investments, making for a very diversified portfolio. And if the private investor had wanted to do it alone, we would have had to raise perhaps between 100 and 150 million to replicate it. The second reason is a lack of product knowledge, because this asset class has been around for a long time. It has been present in the portfolios of major institutions for 60 years in the United States, just over 40 years in Europe and almost 20 years in Asia. But that was before the advent of players like Altaroc. Private clients and their advisors were unaware of it. So there's a crucial need to educate distributors and end customers. And we know what we're talking about, because last year we ran 300 training webinars. The third reason is that this is a complex asset class, with many different characteristics. We've talked about fund calls and distributions. There's the J-curve, valuation methods and exits. And if we just look at it, if we just look at subscription. Historically, if you want to subscribe to a private equity fund, it takes between 3 and 5 months, with an administrative package that's very heavy, that's paper-based, so that's the time it takes, that's the time we take when we invest in private equity funds. It's not suitable for private clients, especially as these funds don't have the teams, the size or the infrastructure to "onboard" so many clients. So we, at Altaroc, had to build the entire digital infrastructure that today's private customers expect when they subscribe to a financial product or even all the other experiences they have in their everyday lives. So a digital ecosystem that costs the management company around 10 million a year. And it's this technology that today's advisors and end customers need to have the best experience.
Eliott Vincent: That's very clear. Yes, there are quite a few obstacles to overcome, as you pointed out. You mentioned the Altaroc Odyssey offer, which is our annual vintage fund of funds. It's true that, in the final analysis, this offer doesn't have much of a history, because it's only been around for four years. And yet, we've had almost 6,000 investors put their trust in us to invest in this product, most of them for their first exposure to private equity. They chose us. How do you explain that?
Dimitri Bernard: First of all, our management company was founded in 1972 by Maurice Tchenio. So, it's one of the oldest private equity management companies in France. But you're right, Vintage Altaroc Odyssey has been around for four years, so it's a relatively short time. But the reality is that, before the advent of players like Altaroc, there wasn't, at least to my knowledge, a portfolio of this quality available at €100,000 or more. So that's one thing, but there are several things that have contributed. There's the fact of giving access to top-quality funds, but there's also the considerable resources that Frédéric and Maurice have put into developing the management company. We've grown to almost 70 people in less than four years. The level of experience in our teams is quite substantial. Firstly, the experience of our founders, who between them have over 80 years' experience in private equity, having created their funds and managed them for several years. Our investment team also includes Louis, Louis Flamand, who has 15 or 20 years' experience in private equity. Before that, he was head of Private Equity allocations at Metlife, one of the world's largest insurers. And this experience, this expertise, is to be found in all our teams, whether in the Technology team, the Operations team, the Marketing team or the Distribution team. In any case, it's an expertise - we're also talking about Track Record - that has been tried and tested in all these teams, with many people who are just as passionate about what they do.
Dimitri Bernard: What we're convinced of is that we do indeed have a quality offering, which isn't limited to a single product, but rather to a whole range of services. So, as we've just said, we organize hundreds of webinars and physical events every year. We have a very active Partner Service, with over 1,000 incoming calls per month, so questions are answered, traced and audited. Another fundamental element is the alignment of interests, which is very important in private equity. Well, Frédéric and Maurice invest 33 million euros in each Vintage every year. So if my calculations are correct, in 4 years today, they have invested a total of 132 million euros in their Vintage, not because they are obliged to do so, but because they are convinced that this is a very good allocation of their capital, which I think is also what reassures our distributors and end customers. And finally, it's important to realize that in each Vintage, we also rely on the expertise of the managers we select. So one of our criteria is seniority, i.e. visible performance over several years, i.e. a minimum of 20 years. So if you take a diversified portfolio of 5 or 6 funds, you'll have a cumulative investment experience of 100 to 150 years, with tens of billions deployed and a track record. And that's really what we can rely on. You have a wealth of experience on the part of the funds in our portfolios. And that's one of our strengths.
Eliott Vincent: And perhaps, if I may add one last comment, it's true that the whole sales team also puts a lot of effort into getting in touch with our partners, training them, explaining the specificities of the asset class to them, and also explaining it to their customers. And it's true that this commitment on their side, I think, is very beneficial for everyone. Incidentally, I'd like to thank all our partners who are here during this webinar, because it's true that thanks to them, we were able to win the famous Patrimoniale 2024 "Best Partner Relations" award, and that's really thanks to them. Thank you very much to all of you who are watching us, we're very proud of them. So thank you for that. Dimitri I think we've finished. Thank you very much for answering all these questions. There was a lot to cover, but thank you! I think it went pretty well. Damien, the floor is yours.
Damien Hélène: Yes, thank you very much to all our partners. Thank you very much Eliott. Thank you, thank you Dimitri. We'll be right back for the conclusion with Frédéric.
