Investing in private equity assets or private equity was something that until now only large wealth could be allowed. The high amounts requested, between three and five million euros at least, to be able to access this type of project filtered entry only to family offices and institutional investors.
The funds of funds traded through private banks made it easier for investors with smaller amounts to gain access, reducing the risk of selection and diversification. For 100,000 euros they had access to unlisted assets, with the condition of having the equity invested for a period that is not usually less than five years and can reach a decade, in exchange for a revaluation that is between 10% and The 12%. A well-paid illiquidity,
Now, if the draft law that the Ministry of Economy is preparing as leaked , the minimum investment would fall to 10,000 euros, which would mean being able to commercialize this type of unlisted products, which includes private equity, private debt, infrastructures. or real estate, among investors, especially conservatives, who have seen how the persistent drought of profitability in traditional fixed income assets has diminished their expectations of long-term revaluation. In this way, the minimum investment would be equated with that of alternative management funds.
It will probably be necessary to meet a series of requirements, such as that the equity invested in venture capital does not exceed a certain percentage of the financial portfolio, in addition to passing a suitability test. They could drink in this way what is considered the cava of the investment at a very affordable price, for what has been the standard in the industry for the moment.
The figures from Ascri, the industry association, reflect the boom that private equity is experiencing in Spain, both in operations and in interested clients. Estimates for the first half of 2021 show that the money raised for this type of project by private national investors reached the figure of 693 million euros.
In the last year, the supply of products has grown, and the inflow of money also shows the interest of investors. Luis Ussia, CEO of Mutuactivos, explains that so far two venture capital funds from the firm MCH Investment Strategies have been marketed: MCH Global Alternative Strategies FCR and MCH Global Real Asset Strategies FCR , which have raised 30 million euros since October of last year.
At Bestinver Infra , the infrastructure fund of the Acciona manager, it has already achieved half of the 300 million that have been raised as equity volume, so they plan to close it during the next year.
Even a more atypical venture capital fund like Dunas Aviation, from the Dunas Capital firm, dedicated to the leasing of aircraft to important international aeronautical companies, is pending a final operation that would complete the planned investment of 120 million euros. In fact, they do not rule out expanding it by another 20 or 30 million before closing the product permanently.
A manager with a profile as patrimonial as Gesconsult has also entered the world of private equity with the launch of Balian Private Equity , a fund of funds that will focus on investment in growth and buy-out operations of unlisted European SMEs, prioritizing those sectors with greater stability, from countries such as Germany, Belgium, Denmark, Finland, France, Holland, Italy, Luxembourg, Norway, United Kingdom, Sweden or Switzerland.
In Abante they also have several products. Abante Private Equity , with a size of 83 million euros, has Altamar Private Equity as investment advisor, while Mapfre Infraestructuras FCR , with a volume of 323 million euros, allows participation in several of the main investments in global infrastructures, from the hand of Macquarie Infrastructure and Real Assets, a giant in the sector. Its latest fund is Neuberger Berman Select Private Equity FCR , currently in the process of raising capital, which includes in its brochure the possibility of operating through omnibus accounts.
Mutua also plans to launch a new venture capital fund in November, called Embarcadero Pantheon Co-investment Global FCR , managed by the firm Embarcadero Private Equity, and whose investment advisor is the international manager Pantheon Ventures. The objective of this fund is to build a diversified and global private equity portfolio through joint ventures with other managers.
It is a closed fund with an investment time horizon of 8 years. At BBVA they have launched a private debt fund of funds, which has up to 12 underlying funds ?? with a greater weight in Europe ??, which means being exposed to the senior securities of some 300 companies, the first with the right to collection in the event of an event and that are usually backed by real assets.
Beka & Bolschare Iberian Agribusiness Fund , is the bet of the Beka Finance group, which seeks to differentiate itself from the competition with a different product, having as a strategy sustainable investment in agricultural plantations of almond, olive, avocado and hazelnut throughout Spain and Portugal It has the former minister of the PP Miguel Arias Cañete and expects to reach a volume of 300 million euros.
Here the minimum investment is 150,000 euros, with a management commission starting at 1.25%, although the estimated profitability can reach 13% in an investment period of 10 years. This fund has the peculiarity of being one of the few venture capital that has the sustainability seal according to the European directive, a label that will also have Dunas Absolute Impact, Dunas’ next product, which will be up to 50 million in size.
An understandable product?
To what extent is the traditional investor prepared to understand the characteristics of venture capital products, even if they lower the minimum investment to 10,000 euros? At Caixabank, the largest Spanish manager by volume of assets under management, they explain that they are in a position to achieve between 400 and 600 million annually in commitments in products of this type, thanks to the boom in alternative investment.
“The concept tends to be simplified, but in reality, very different asset classes underlie this umbrella, whose returns can range from levels of 8% to close to 20%, while their level of risk can differ a lot if we compare, in the extremes, an infrastructure fund with a venture capital fund, “they point out.
Ricardo Miró-Quesada, partner and head of private equity at Arcano Partners, one of the most prestigious firms in this segment, assures that the appetite for alternative assets, in general, has been increasing for several years.
“Since we started in 2006 we have raised and advised more than 7,000 million in alternative assets, approximately half of them from Spanish investors. We started with funds of funds that invested in the primary market, but with a term that was perhaps too long for non-clients. institutional, so in 2009 we began to incorporate secondary transactions into our portfolios, which shortened both investment and money recovery periods, very well received by smaller investors in particular.
For Aquilino Peña, president of Ascri, in the absence of knowing the final draft of the bill, the reduction of the minimum investment could help democratize access to investment in private capital, “a type of asset that has proven to be part of the solution to the current situation “,
Entities generally applaud this democratization of investment, provided that certain requirements are met in its commercialization, but wealth advisers are wary that investors are aware of the illiquidity that these products entail. José Luis Segimón, director of investments in Private Markets at BBVA AM, explains that the diversification of the portfolio will always be beneficial, both in terms of sources of income and risks. “Liquid assets fulfill their role in the portfolio, neither better nor worse, as long as there is rigorous advice,” he adds.
In Beka they consider that this reduction of the minimum investment is “great news”. “For investors because it improves the democratization of an asset class that to date was restricted to large assets and, on the other hand, for managers, because it opens up the possibility of accessing a very relevant mass of savers, despite that supposes an exciting challenge from an operational and educational point of view “, they indicate in the signature.
It could make more sense to facilitate access to international funds for Spanish retail savers
Eduardo Martín, director of products and business development at Andbank Spain, explains that this reduction will mean greater control and distribution mechanisms by financial institutions, to discriminate who are the most suitable clients based on their risk profile.
“They are complex products and present the risk of illiquidity, because they require a commitment to be invested for 5, 7 or 10 years. If it was already difficult to market them with the 100,000 euro threshold, now it will be necessary to redouble the effort to ensure that the Investor understands all the characteristics of these funds, “says Martín, who underlines that some venture capital funds could, however, raise that threshold of 10,000 euros to better select their potential clients.
Rafael Soldevilla, director of products and services at A&G, considers it positive that access to venture capital funds is facilitated, but “we wonder if a saver who is going to invest 10,000 euros will be able to dedicate the time and effort necessary to take a investment decision in a fund in which it will not be able to obtain liquidity in periods of between 8 and 10 years “.
In his opinion, it could make more sense to facilitate access to the Spanish retail saver to international funds with investment policies very similar to Spanish venture capital funds. “Does it make sense that an international venture capital fund is only distributable in Spain to professional investors while a Spanish fund can be distributed to retail investors with the simple requirement that the investment be greater than 100,000 euros?
In our opinion, it lacks sense and we are depriving the non-professional Spanish investor of having access to international funds, which implies a restriction on the movement of capital in an increasingly global world “, he emphasizes.