Illiquid Investments
Illiquid Investments
Illiquid Investments
Primary Private Equity Fund (Limited Partnership)
Feeder Fund
- One or more investors commit to a feeder fund, which is set up by a GP to invest in one pre- identified primary fund (known as the “underlying fund”)
- Provide lower minimum investments (typically $250,000) than primary funds, allowing high net worth individuals (“HNWIs”) access
Fund of Funds (FoF)
Secondaries
Differences Primaries and Secondaries
Primaries & Secondaries Are Complementary Strategies
Co-Investment advantages and risks
Listed Private Equity Funds
Due diligence of Funds/Fund of Funds
Company Due diligence
Exit Strategies
Types of Real Estate Investments
Real Estate Valuation Methods
Shareholders agreement
Ddilution
3 Types of Anti dilution
How to achieve Operational Improvements
Value Creation
Operational Improvement
Multiple Expansion - Multiple Arbitrage
Leverage
Multiple Expansion
Definition Liquidity / Illiquidity
Real Value Approach
Real Value =
Economic age
Real Value = Construction value - depreciation + value of land
economic age:
age (building shell)
+ age (building envelope: roof, windows etc.)
+ age (outfitting of the building: paint, parquet flooring) * 2
+ age (building services: heating, etc.) * 2
sum/6 = economic age
Real estate ownership in Switzerland
− Land ownership
− Ground lease ownership (Baurecht) represents a long-term easement recorded in the land registry that entitles its
beneficiary to erect and own constructions on the base plot. It is a form of ownership frequently used for strategic
development zones, such as industrial zones in Switzerland’s main cities.
− Condominium-principled ownership (Eigentümergemeinschaft) represents a form of land ownership by which one
right of ownership is owned by a community of owners.
Most common ownership in Switzerland:
− Sole ownership
− Co-ownership (meist Stockwerkeigentum); predominant form is the condominium-principled co-ownership
− Main characteristic: different persons own separate units in a common property.
− The co-owners have the exclusive right to make sole use of specific parts of a building. Each condominium owner can manage,
use and design the structure of their units as they wish but must not obstruct any other condominium owners in the exercise of
their own rights or damage the common parts of the property.
− Importantly, each unit has its own folio in the land register and may be sold separately without the consent of the other.
Venture Capital
Refers to equity investments in earlier-stage, younger companies that need funding and support to
- get an idea off the ground,
- develop a business model or
- launch into the market
Private Equity
Incorporates venture capital but the term is usually used to refer to investments in more mature – usually profitable – companies with the potential for growth
Different Private Equity Financing Stage
Seed Capital
Start-up Capital
Expansion Capital
Growth/Pre-IPO
Replacement Capital
Buyout
Special Situation (Restructuring/Turnaround)
Reasons for Private Equity
1. Better performance than shares and bonds by active investment style
2. Better selection of investments (due diligence)
3. Absolute returns (cash returns to investors)
4. Diversification (low correlation to other investments)
5. Access to companies
6. Access to «inefficient markets»
7. Private equity is of great economic significance
8. Responsible investments (environmental, social and governance “ESG” criteria)
Reason against Private Equity
1. Long-term investment
2. Low liquidity / illiquidity and irregular cash flows
3. High expenditure of resources (e.g. investment manager)
4. Targets are often unknown
5. Manager selection – choosing high quality fund manager is difficult
6. LPs have no control over investment choices
7. Company risk – although during due diligence
Limited Partnership Private Equity Fund Structure (GP/LP)
It is the most common structure
Who are Limited Partners (LPs)?
§ Family Office
An entity that provides services to one or more affluent families
§ Sovereign Wealth Funds
State-owned investment funds investing in foreign direct private equity funds to diversify their
portfolios
§ Foundations
Non-profit organisations through which private wealth is distributed for the public good
§ Fund of Funds
Private equity fund that primarily takes equity positions in other funds
§ Government Agencies
Country, regional, governmental and European agencies or institutions for innovation and
development
Lifecycle of a Private Equity Fund
Lifecylce PE - Fundraising Process (Pre)Marketing
Lifecylce PE - Fundraising Process
After marketing the fund raise capital
Lifecycle of PE - Investment
Lifecycle of PE - Holding
Lifecycle of PE - Divestment/Exit
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- 1 / 43
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Cartes-fiches
Venture Capital
Refers to equity investments in earlier-stage, younger companies that need funding and support to
- get an idea off the ground,
- develop a business model or
- launch into the market
Private Equity
Incorporates venture capital but the term is usually used to refer to investments in more mature – usually profitable – companies with the potential for growth
Different Private Equity Financing Stage
Seed Capital
Start-up Capital
Expansion Capital
Growth/Pre-IPO
Replacement Capital
Buyout
Special Situation (Restructuring/Turnaround)
Reasons for Private Equity
1. Better performance than shares and bonds by active investment style
2. Better selection of investments (due diligence)
3. Absolute returns (cash returns to investors)
4. Diversification (low correlation to other investments)
5. Access to companies
6. Access to «inefficient markets»
7. Private equity is of great economic significance
8. Responsible investments (environmental, social and governance “ESG” criteria)
Reason against Private Equity
1. Long-term investment
2. Low liquidity / illiquidity and irregular cash flows
3. High expenditure of resources (e.g. investment manager)
4. Targets are often unknown
5. Manager selection – choosing high quality fund manager is difficult
6. LPs have no control over investment choices
7. Company risk – although during due diligence
Limited Partnership Private Equity Fund Structure (GP/LP)
It is the most common structure
Who are Limited Partners (LPs)?
§ Family Office
An entity that provides services to one or more affluent families
§ Sovereign Wealth Funds
State-owned investment funds investing in foreign direct private equity funds to diversify their
portfolios
§ Foundations
Non-profit organisations through which private wealth is distributed for the public good
§ Fund of Funds
Private equity fund that primarily takes equity positions in other funds
§ Government Agencies
Country, regional, governmental and European agencies or institutions for innovation and
development
Lifecycle of a Private Equity Fund
Lifecylce PE - Fundraising Process (Pre)Marketing
Lifecylce PE - Fundraising Process
After marketing the fund raise capital
Lifecycle of PE - Investment
Lifecycle of PE - Holding
Lifecycle of PE - Divestment/Exit
Fund Stage Focus
There are different Private Equity funds for investing
Private Equity Investments by Stages
Areas of Diversification
Primary Private Equity Fund (Limited Partnership)
Feeder Fund
- One or more investors commit to a feeder fund, which is set up by a GP to invest in one pre- identified primary fund (known as the “underlying fund”)
- Provide lower minimum investments (typically $250,000) than primary funds, allowing high net worth individuals (“HNWIs”) access
Fund of Funds (FoF)
Secondaries
Differences Primaries and Secondaries
Primaries & Secondaries Are Complementary Strategies
Co-Investment advantages and risks
Listed Private Equity Funds
Due diligence of Funds/Fund of Funds
Company Due diligence
Exit Strategies
Types of Real Estate Investments
Real Estate Valuation Methods
Shareholders agreement
Ddilution
3 Types of Anti dilution
How to achieve Operational Improvements
Value Creation
Operational Improvement
Multiple Expansion - Multiple Arbitrage
Leverage
Multiple Expansion
