"Our private equity expertise on the investor's side enables us to make better fund selections".
Pierre-Olivier Desplanches, Co-founder and Managing Director of Archinvest, and Alexandre Ortis, Archinvest's Director of Development, present Archinvest's approach to private equity. With a wealth of experience in investor-led private equity, Archinvest selects the best funds to offer investors with 3 strategies: primary LBO, secondary private equity and private debt.
What makes Archinvest unique?
P-O.D: Archinvest's uniqueness lies mainly in the DNA of its co-founders. We come from Private Equity as investors. In my case, I spent almost 25 years in the industry, almost 20 years with Carlyle, a major international private equity manager, as an investor in an LBO fund, working with them over several generations. We know the private equity product inside out, we know how to put together an LBO deal. We know why this asset class outperforms other asset classes, so we can explain it to our partners and their clients, and that makes a big difference. Above all, we'll be able to select funds to offer to our investors.
There are almost 15,000 funds in the world, and the name doesn't mean much - there are many criteria to take into account. We have this knowledge of the relevant criteria to make sure we don't make a mistake. If I tell you about Carlyle, KKR or Blackstone, they're all big names in private equity, but that doesn't mean much. These companies manage dozens of funds, so you have to analyze them at team and fund level. On the other hand, we are self-owned, so we are completely agnostic in our fund selection. When we make a fund selection, we ask the managers to invest significantly in their products, and we impose the same rule on ourselves.
All the funds we offer our investors, we invest in ourselves. We consider that if they are good investments for our investors or our partners' investors, they will also be good investments for us. Secondly, we have a multi-product, multi-strategy approach, meaning that we select all the strategies, but we propose them according to the market environment, so that they are relevant.
Today, we have three with pure strategies, so you have products that correspond to different risk-return profiles. Thanks to our expertise, we can help all our partners and investors looking to invest in private equity to better understand from the inside how it works. Indeed, it's very important for them to have this intimate knowledge of the product.
How do you select your funds, and how do you see your selection for 2025?
P-O.D: When we look at the players we want to offer our investors, we prefer those who have been established for many generations, who are in their fifth, sixth, ninth or tenth generation of funds, who have a great deal of experience and who have weathered several economic crises. We select large funds, with several billion under management, enabling them to invest in large, geographically and sectorally diversified companies. We will obviously select managers who are in the top quartile in terms of financial performance, and above all managers who have shown that, whatever the economic cycle, they have low volatility in their performance. Their performance is relatively stable over time. As I said, we'll be selecting managers who invest significantly in their funds. This obviously shows that they believe in their business model, and that's a fundamental element. We're also going to check something that's very difficult to assess: the stability of the management team. Because obviously, if it's not this team that's going to invest your money, you don't really care about the performance it has delivered in previous years. It's not information that's available on the shelf. You have to have networks, you have to know these people. Finally, we select funds that fall under article 8-9, which have made a significant ESG shift, because we have a strong conviction in this area.
What funds do you offer today?
AO: Yes, so we've chosen three strategies, as Pierre-Olivier said. The first is primary LBOs, the most important discipline in private equity, which will benefit to some extent from the fall in valuations we've seen, given the rise in interest rates, particularly in 2022. We will therefore have two funds: Archinvest LBO 2, which will focus on European and American mid-caps, through four managers. Archinvest LBO US 1, which is its counterpart, invested 100% in the United States. This is a dollar-denominated fund. The second strategy is Archinvest Secondaire 1, a fund invested in secondary private equity. Here, we'll be focusing on institutional investors in need of liquidity. So we're going to buy back the fund shares they hold at a discount. Investing in secondary equities also means having a portfolio that's fairly easy to read and highly diversified, since it will be invested in over 5,000 underlying transparent companies, when we look at Archinvest Secondaire 1. Finally, the last fund, the last strategy, is Archinvest Dette Privée 1, a fund invested in this theme. Mostly senior debt. The particularity of this fund, launched in 2023, is that it is more than 50% deployed, with a fairly moderate risk/return profile compared with primary or secondary private equity.
