Tue, Feb 9, 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. How Einhorn survived a nightmare year[more]

    From Bloomberg.com: Even when a hedge fund has an awful year, which was the case for David Einhorn's Greenlight Capital, there are lessons to be learned. Many funds would have had a tough time surviving a year like Einhorn experienced in 2015, when all the stars seemed to align against him and Green

  2. Legal - Hedge fund founder wins early release in U.S. insider trading case, Gramercy seeking $1.3 billion from Peru over land-bond dispute[more]

    Hedge fund founder wins early release in U.S. insider trading case From Reuters/Streetinsider.com: Former hedge fund manager Doug Whitman on Tuesday won a reprieve from serving the remainder of his two-year sentence for insider trading after several judges expressed skepticism that his 2

  3. Investing - David Einhorn finds a winner in Michael Kors[more]

    From Thestreetinsider.com: Greenlight Capital hedge fund manger David Einhorn took his lumps in 2015. The fund lost over 20 percent on the year amid bets gone bad being long a plunging SunEdison and short a couple high-flying FANG stocks. However, today Einhorn is again showing his stock picking pro

  4. Investing - Avenue Capital's Marc Lasry: We like European bank loans, Comment: A bunch of hedge fund managers are chasing the 'dream of crushing a major structural problem'[more]

    Avenue Capital's Marc Lasry: We like European bank loans From CNBC.com: European banks are under immense pressure, but at least one prominent hedge fund has found what it thinks is a good opportunity in the wreckage. Marc Lasry, co-founder and chief executive of hedge fund Avenue Capital

  5. Credit Suisse cherry picks hedge fund ideas[more]

    From FT.com: Credit Suisse Asset Management plans to cherry pick profitable concepts from hedge funds with the launch in Europe of a “best ideas” strategy. The investment arm of the Swiss bank said the strategy will separate it from other funds blighted by “overcrowding problems”. It comes at a time