In times of low bond yields and continuing uncertainty on the global equity markets, alternative investment instruments are once again coming to the fore. Private market investments – in English private equity – are a valuable and meaningful diversification opportunity, especially for very wealthy private investors.
In September 2018, the US technology group Amazon became the second company after Apple to exceed the market capitalisation of one trillion. This after a gigantic leap in sales and profits within a year. And quite a few corporate analysts expect that soon more companies, especially from the technology sector, will also break through the trillion mark in market capitalization. In the general economic quest for size, however, one thing is often forgotten. The backbone of any developed economy is not the large listed companies, but rather the unlisted small and medium-sized enterprises (SMEs). This is true not only in terms of the total number of people employed in the sector, but also in terms of their contribution to the national economy. However, investments in such privately held companies are naturally more complex, the tradability of the shares is very limited and requires a correspondingly longer investment horizon. Transparency with regard to business development is also significantly lower and requires more trust in the management.
On the other hand, the investor gains access to innovative business models far removed from the «mainstream» and is normally compensated for his commitment and the risks taken with a significantly higher return. In addition, investments in private equity are obvious and meaningful, especially for very wealthy private individuals or families, who often also run their own businesses and/or companies. The investor does not simply buy a share, but contributes with his capital significantly to the growth and successful development of a company. This not least against the background that raising capital even for profitable and innovative SMEs via traditional channels such as banks is anything but easy.
The key to any successful private equity investment is the selection of the appropriate opportunities or companies. Precisely because transparency is deeper and access more difficult. And this is precisely where our claim and added value as a family office begins. In addition to our existing commitments in private equity investment funds, we can also draw on an outstanding network of investment specialists in this area. In addition, we recently entered into a partnership in Switzerland with adbodmer, a renowned advisory firm specializing in direct investments. This will enable us to offer our clients an even broader range of interesting private equity opportunities in the future.
