Contrary to most beliefs, privately held companies represent the vast majority by numbers and value, outsizing the number of exchange traded ones. Anterion advise fund managers on how to raise capital from institutional investors, and provide bespoke advise to investors on how to access this huge market.
Whereas most listed shares are traded on a daily basis, the shares of privately held companies are not. Hence, transactions are not on "Auctions" via an Exchange, but based on private negotiations between seller and buyer.
In order to access this market, most professional investors can only invest via Private Equity funds. Other options do exists - please contact Anterion for an in-depth discussion.
What has changed over the past decades?
Being a successful fund manager (GP, General Partner in a limited liability company) 20 years ago was mostly required financial engineering skills. Today, however, it is different.
Special skill-sets are required; , to build an attractive eco-system to attract deals and talent, deal structuring, operational optimization, ability to digitalize, to understand very complex technologies and to be financially savvy - to set your company aside in a hugely competitive market.
What to do?
If investors are able to select the most talented managers, they are likely to achieve above-average returns. Just as in the world of listed securities. Obviously, spreading your investments is key. But how to do that when you, as an investor, have limited time and capital at your disposal?
In our view, supported by industry data, the best smaller fund manager and their funds run by newer managers will outperform the larger, well-established names. The reasons are multiple, one major reason being that the smaller funds operate in a SME market niche where the larger capital providers cannot participate and, hence, avoid auction-pricing on their deals.
The problem with this is, however, that smaller funds do not fit all investor's investment appetite. Larger pensions funds, for example, cannot invest in these vehicles due to their size.
Therefore segmentation of fund sizes always takes place; Mega-funds, larger funds etc. cater to different investor sizes due to these investors larger risk budgets. Narrowing down the Universe is. key.