Fri, Jul 1, 2016
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Private Equity Strategies

Cyril Demaria on Swiss private equity and his new book – Le Temps

Tuesday, January 22, 2013

By: Benedicte Gravrand

Allocators should know how to differentiate private from hedge funds, claims Cyril Demaria, author of an educational book on private equity in Switzerland (in French: "Le private equity suisse: acteurs, investissements et performance" (2nd edition, SECA, 198 pages)).

He also wrote "Introduction to Private Equity" (English version: Wiley, 2009, 248 pages).  This specialist is not just an author; he is also a fund manager for business angels and family offices, he holds a doctorate from the University of St-Gall, and teaches at the Edhec Business School in France. He was interviewed for Opalesque Radio a couple of years ago and talked about an angels fund he managed called Pilot Fish I.

Last month, he told Swiss daily Le Temps in an interview that many reputed Swiss companies - such as Sunrise, Orange, Selecta, Geberit, Charles Vogele, Swissport - have been or still are in a private equity fund's portfolio. However, the Swiss market and its evolution are poorly documented, he claims.

He tells Le Temps that the reasons for writing this book was to inform on the Swiss private equity market, in French. This second edition (the first edition was published in 2009) is an update, and also features some commentaries from private equity specialists. It is addressed to the Swiss parliament, he says, to students, to business angels, and to entrepreneurs who might be the target of private equity funds.

He insists on the difference between private equity and hedge funds. "It's a matter of reputation," he adds, "and besides, we are not in the same category." Also, private equity should not be regulated the same way. For example, the European Union's AIFM Directive forces alternative funds to review part of their portfolio's holdings each quarter, but that is not suitable for private equity. 

Institutional investors do not like the implied uncertainty of performance objectives, but uncertainty is much more certain, he notes, than previsions that are taken for granted. But the bothersome matter of future performance uncertainty can be countered by actual performance, he adds. As indeed, there can be more reward in private equity than in traditional investments.

In the majority of cases, all goes well between buyers and entrepreneurs, he tells Le Temps. But sometimes, it goes very badly, as it did when US group Carlyle took control of a large French producer of corrugated board called Otor.

The Carlyle Group's acquisition of Otor SA in 2000 led to several lawsuits over the following years as Otor refused to hand over control. In 2010, DS Smith, an international packaging supplier, and Carlyle entered into exclusive discussions regarding the acquisition of the entire interest controlled by Carlyle in Otor. Closing was expected in Q4-2010 but we heard nothing about it - although it seems Carlyle no longer owns Otor.

We more often hear about clashes than about successful operations, Demaria notes.

Family-owned businesses could do with an investor when they reach certain stages in their growth where there is a need for a strengthening of competence or for a better structure of internal communication, he explains. Those needs can lead to the letting go of some activities, which are no longer relevant. This letting go can temporarily put the business under pressure. Another way that private equity funds can be useful to those businesses is when their acquisition is an alternative to an estate for the heirs. Demaria further tells Le Temps that investors get better results if they offer stock options to company managers from the start.  Nowadays some private equity funds actually reserve part of their stake for employees too, he adds. All for the better.

 
This article was published in Opalesque's Private Equity Strategies our monthly research update on the global private equity landscape including all sectors and market caps.
Private Equity Strategies
Private Equity Strategies
Private Equity Strategies


Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Investing - Soros, Druckenmiller among hedgies profiting in market plunge, Hedge funds were most bullish on bonds since 2004 before Brexit, Surprise Brexit vote unleashes scramble for dollars, High-yield hit on Brexit but no panic selling, Scientist turned hedge fund founder lured to pound, euro, Hedge fund avoids commodities, posts big gains[more]

    Soros, Druckenmiller among hedgies profiting in market plunge From HITC.com: Bullish positions in gold and volatility and well-timed short bets on China and emerging markets, among other areas, were some of the trades that benefited hedge funds on Friday as markets digested Britons' s

  2. Manager Profile - A 26-year old hedge fund manager called Brexit — here's what he thinks about the historic vote[more]

    From Businessinsider.com: Taylor Mann is not your typical fund manager. The twenty-six year old Texas A&M graduate manages Pine Capital in Larue, Texas (population 160), where he resides with his three-year old daughter. Also atypical compared with many of the largest funds out there, Mann makes

  3. Chesapeake Partners to liquidate hedge fund amidst 'hostile environment'[more]

    Komfie Manalo, Opalesque Asia: Chesapeake Partners Management, the hedge fund run by woman fund manager Traci Lerner said it would return investors’ money after 25 years because the market environment has become "hostile" to manage other people’s money, reported

  4. Europe - George Soros says Brexit has ‘unleashed’ a financial markets crisis, Brexit—what we know, Will the UK’s departure be a ‘soft-Brexit’ or a ‘hard-Brexit’?, Brexit: Six-point action plan for asset managers[more]

    George Soros says Brexit has ‘unleashed’ a financial markets crisis From Bloomberg.com: Britain’s decision to leave the European Union has “unleashed” a crisis in financial markets similar to the global financial crisis of 2007 and 2008, George Soros told the European Parliament in Bruss

  5. Hedge Fund Due Diligence Exchange offers complete due diligence reports at $1500[more]

    Matthias Knab, Opalesque: HFDDX is offering complete alternative investment due diligence reports at $1500 US. Industry professionals can simply go to www.hfddx.com and indicate their interest in sponsoring one or more DD Reports for $1500 each.