A few days ago, I looked briefly at Altamir, the French listed Private Equity vehicle which invests exclusively into APAX funds.
This is what I wrote about the CEO and largest shareholder Maurice Tchenio based on how I understood the fee structure:
So the “privilege” of a shareholder to invest into APX via Altamir is purchased quite expensively. This also puts the CEO investment a little bit in perspective. Yes, he has invested around 100 mn of his own money into Altamir, but in 2014, the management fees and profit share netted him close to 30 mn EUR direct, whereas the proportional profit of his share position was “only” 15 mn EUR.
Last week I got a very friendly Email from Altamir’s IR with the offer to explain the fee schedule in more detail. As a follow up they did send me a nice memo with all the details.
In a Nutshell, Tchenio only receives around 2,5 mn EUR from two sources:
– he is entitled to ~22,5% of the “carry” on the old direct investments
– plus he keeps 5% of the adivisory fee paid to the general partner for the direct investments
As the IR pointed out, Tchenio earns more in dividends on the stock than on those fees, so the alignement between him and shareholders is better then I have assumed before.
Just to recap how the fees and carried interest are structured a short list based on 2014
Fees/costs: 17 mn EUR thereof
– 6,8 mn EUR fund level fees
– 1,9 mn EUR HoldCo cost
– 8,4 mn EUR fees charged by the GP (inlc. 1,4 mn VAT), 95% passed on to APAX
Carried interest: 13 mn EUR thereof
– 4,3 mn APAX fund level
– 8,5 mn direct investments, therof Mr Tchenio as former APAX partner 1,9 mn EUR
Having clarified this, this still leaves the issue that 17 mn cost for a 600 mn portfolio is quite a lot. The almost 3% fee includes ~30% listed stocks (Altran, Albioma, GFI) and cash.
As an investor, I could replicate those stocks much cheaper than what Altamir is offering, or alternatively I could invest in a French based value fund like for instance Amiral. This is a comparison chart between the CAC Small&MidCap index, Altamir and the Amiral Sextant PEA, a smallcap value fund since 2002:
The lowest line is the index and we can see that Altamir has beaten the index by around +1,5% p.a. However the Amiral fund has beaten Altamir by a large margin despite charging also around 2% fees and a 15% performance fee. Although this is clearly no apples-to-apples comparison it clearly shows that Altamir’s perfomance is not that stellar (after fees).
So my assumption that Mr. Tchenio is pocketing a large amount of the fees was clearly wrong. Nevertheless, at least for a “non tax advantaged” investor like me, Altamir doesn’t really offer any value. The fees are much to high and justify a discount. If the right dicount is 30% or less could be discussed but paying 3% + carry on 30% listed stocks is not a real value proposition and will always lead to a discount epsecially on cash and listed companies. Again, if the discount would widen more, it would be maybe worth an investment but for now, I think I can find better investments, especially in France.