The Altaroc platform creates private equity funds of funds for individuals, to allow them to invest in the capital of unlisted companies. Its director, Frédéric Stolar, discusses the challenges linked to the democratization of these products.
L’Express: You set up Altaroc three years ago. What obstacles did you encounter?
Frédéric Stolar: When we launched the platform, with Maurice Tchenio, the private equity market for individuals was almost non-existent. It was essentially a supply problem. To access a quality fund, you must provide at least 20 million euros. However, very few wealth management advisors or private banks can raise such an amount from their clients.
In this context, we wanted to create a product worthy of large institutional investors, by aggregating demand and redistributing the supply behind it. This involves technology in particular: we have recruited 23 people who create the necessary pipes to streamline transactions. We have also invested a lot in training: we produce 300 webinars and 100 events per year. Finally, we have built an ecosystem of services – call center, digital portal, etc. – in order to support distributors and their customers.
How is your offer made up?
The Odyssey fund is at its heart. This is a closed fund, with a duration of ten years, accessible from 100,000 euros. The 2024 edition is our 4th vintage. This product is made up of two pockets: for the main one (80%), we make commitments to six funds, LBO – leveraged buy-out – and growth equity – growth capital -, which finance companies in strong development . The remaining 20% is made up of around ten direct lines in companies, in co-investment alongside the funds. We target management companies whose vehicles have been the best in the past and which we believe will continue to be.
What assessment do you draw today?
Individuals are there. We collected 1.2 billion euros from 8,000 customers over our first three vintages. To facilitate the management of fundraising calls, we have set up a subscription system which consists, for an investment of 100,000 euros, in paying 10,000 euros per semester for five years. The profile of investors is very varied: senior executives who want to prepare for retirement, successful entrepreneurs who have sold their company and also some football players! For 95% of them, this is their first investment in private equity.
What are the next steps for Altaroc?
We have a challenge of critical size to interest large private equity funds and amortize our investments. The individual market is potentially immense but it currently still attracts little volume. We are expanding in Europe: we have opened an office in Switzerland and another in Belgium. Two new countries should follow soon.
Furthermore, we want to expand our range, with two innovations: a more democratic product, under 100,000 euros, and a very high-end offer, for wealthy families, which will allow them to manage turnkey wealth strategies.
The green industry law imposes from October 24 an unlisted share in the management managed in life insurance and retirement savings. Is this a good thing?
Yes, with a few caveats, because life insurance is a highly regulated product, which imposes certain management constraints. In addition, life insurers do not want to manage deferred calls for funds, which reduces performance. In addition, they guarantee the liquidity of the product, which constrains collection. At Altaroc, we do not want to integrate cash into our products because it distorts the asset class and deteriorates the return. We must invent other solutions: we are therefore considering a new generation of products where the liquidity risk will not be borne by the insurer.
We are seeing many open funds created, with portfolios already set up, to meet this requirement. What do you think?
These so-called “evergreen” funds allow clients to enter and exit whenever they want. But they have their share of problems, which do not yet seem to us to be well identified. First of all, they must hold cash to allow leavers to recover their savings. Furthermore, new entrants dilute the profitability of old ones because newly invested money takes time to be deployed. As a result, we fear that there will be disappointments with poorly constructed evergreen funds.
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