Accessing Apax Partners investments
through the stock market

20 years 1995-2015

Why does Altamir invest exclusively with Apax Partners ?

Altamir's strategy is to build on the strengths of the Apax brand. A pioneer and leader in the private equity industry, Apax Partners has a 40+ year track record of making successful investments which have led to consistent outperformance of private equity and global public market benchmarks.

Founded by Maurice Tchenio, a co-founder of Apax Partners, Altamir was created and listed on the Paris Stock Exchange in 1995 as a means to access the Apax Partners France portfolio through the stock market. The vehicle has grown to include investment in the funds of London-based Apax Partners LLP.

To date, Altamir has invested alongside or in Apax Partners funds via four successive and concurrent investment mechanisms, as follows:

  1. Co-investment alongside Apax Partners France (from 1995 to 2011);
  2. Investment in Apax Partners France funds (beginning in 2011 with Apax France VIII);
  3. Investment in Apax Partners LLP global funds (beginning in 2012 with Apax VIII LP);
  4. Co-investment alongside Apax Partners LLP and Apax Partners France, as the opportunity arises.

What is the rationale for the stated objective of growing AuM to €1Bn?

The Manager has stated as one of Altamir's three principal objectives to grow assets under management (roughly €500m at present) to a critical size of €1Bn. The reasons are threefold:

  • To increase the universe of potential shareholders by increasing liquidity of the shares. At present, many institutional investors that are interested in the Altamir investment case are not able to invest in the vehicle due to its relatively small size, and to the low liquidity of the shares. Doubling assets under management to €1Bn should tangibly address the liquidity issue.
  • To remain viable within a consolidating sector. The Manager believes that in order to remain a vital and viable player in this space, two critical factors are a relatively large size, and a strategy of differentiation vis-à-vis other players in the sector.
  • To remain an essential partner to Apax Partners SAS, and to become a very important partner to Apax Partners LLP, thus securing the ability to optimize performance via dynamic cash management (ability to adjust commitment levels semi-annually to available cash). In order to play this role vis-à-vis the two fund managers via which it invests, Altamir must ensure its position as a Limited Partner of significant size within the investment funds to which it makes commitments.

How is the investment portfolio valued?

Portfolio companies are valued by the Funds’ investment managers, reviewed by the Funds’ auditors, and agreed upon by the Board of Advisers of the Funds.

  • Altamir’s policy is to follow the valuations made by the Funds’ investment managers.
  • In addition, these valuations are reviewed by the management of Altamir Gérance, by Altamir’s auditors, and by the Audit Committee of Altamir’s Supervisory Board.

Methods of valuation

Altamir’s investment managers – Apax Partners SA and Apax Partners Mid-Market in France, and Apax Partners LLP in the UK – use valuation methods that comply with the International Private Equity Valuation (IPEV) guidelines.  Valuations made by the Apax Funds’ managers have always been conservative, as evidenced by consistent uplifts when portfolio companies are exited. 
Apax Funds value their unlisted investments on a semi-annual basis, and their listed investments on a quarterly basis.

Apax’s valuation of unlisted investments:

  • Companies in the portfolio for more than one year
    • Valuations are usually based on the multiples of a sample of comparable companies (listed companies and recent transactions).
    • Adjustments:
      • Apax Partners SAS may apply an adjustment of up to 30% on portfolio companies, based on an assessment of their liquidity.
      • Apax Partners LLP generally applies no adjustment, as their investments tend to be larger companies.
  • Companies in the portfolio for less than one year
    • Apax Partners SAS holds companies at acquisition cost during the first year, except for specific cases
    • Apax Partners LLP usually holds Growth investments close to acquisition price.  Buy-Out investments may be re-valued at day one.

Apax’s valuation of listed investments:

  • Listed investments are valued at the closing price of the last day of the reporting period.
  • Adjustments:
    • Apax Partners SAS applies an adjustment (in a range of 5% to 25%) to listed shares that are subject to a lock-up, and also in extenuating circumstances.
    • Apax Partners LLP generally does not apply adjustments to its listed investments, but may do so if warranted by extenuating circumstances (not including lock-up restrictions). 

What is the legal structure for Altamir?

Altamir is a Société en Commandite par Actions (French Limited Partnership by Shares), and from a tax perspective has opted for the tax status of "Société de Capital Risque" or SCR (translated as venture capital company).

What is a "Société en Commandite par Actions" (French Limited Partnership by Shares)?

A société en commandite par actions (Limited Partnership by shares) or SCA is a French legal structure with two types of partners:

  • Limited Partners or shareholders who own the existing shares of the company, an any shares that may be issued in the future, and have limited liability as relates to the company.
  • A General Partner with unlimited liability

In the case of Altamir, the General Partner appoints the management company, which in turn is overseen by a Supervisory Board, made up of ordinary shareholders of the company.

What are the management fees paid by Altamir to Altamir Gérance (the management company) and Amboise Partners SA, the investment adviser?

1% excl. tax (1.2% incl. VAT) semi-annually on statutory shareholders’equity. 95% of the fees are paid to Amboise Partners SA under the investment advisory agreement and 5% are paid to the management company Altamir Gérance.

Does Altamir pay fees to the Apax France funds VI, VII and VIII to co-invest in their portfolio companies?

No, it does not.

What fees are paid to the managers of the Apax Funds?

As an LP in the Apax France VIII, Apax France IX, Apax VIII LP and Apax IX LP funds, Altamir pays the same management fee as all other investors in those funds. It is the same for the carried interest.

Is there a double fee structure?

In order to avoid a double fee structure on the investments made through the Apax Funds, a fraction of the management fee paid by those Funds to their managers (Apax Partners SAS and Apax Partners LLP) is deducted from the management fee due by Altamir. However, there is ultimately an additional layer on the management fee, since the Apax Funds charge fees on committed capital while the amount of the fee which is deducted is only computed on the amount of equity actually invested by Altamir in those funds. No performance fee (carried interest) is paid at the Altamir level for the investments made through the Apax Funds.

Why is the payment of a dividend included within Altamir's objectives?

Altamir's primary objective is to maximize total Shareholder Return (TSR). A mechanism for achieving this is the payment of an annual dividend. While yield is not a priority for larger investors, it is regarded as an important component of shareholder return for many other investors (both institutional and private). Please see below for further details on the dividend policy and the rationale behind it.

What is Altamir's dividend policy? What is the rationale for this policy?

In March 2013, Altamir's Supervisory Board established a new dividend policy, defined as a range of 2% to 3% of year-end NAV, to be paid annually. The new policy is expected to provide an annual dividend which is:

  • Sustainable: NAV is always positive.
  • Visible: NAV is published on a quarterly basis; analysts can update their dividend estimates on an on-going basis with availability of new information.
  • Growing: The objective pursued by the Manager is NAV growth; barring a cash crunch, the dividend should grow at the same rate as NAV

Does Altamir have a share buyback program in place?

Altamir does request from its shareholders at each AGM the faculty to buy back its own shares on the stock market. This faculty is used to put a "liquidity contract" in place, executed by a top tier French broker, which serves the role of ensuring a minimum level of liquidity in Altamir shares. The number of shares bought and sold, and the amount of cash used to buy and sell the shares is reported by Altamir twice a year.

Altamir's Manager does not believe that it would serve the best interest of the company or its shareholders to carry out a share buyback program in order to cancel its own shares. In effect, the outcome of such a program would be to further reduce liquidity of the shares. Most importantly, after studying the issue in great detail, there is no evidence to suggest that share buyback programs carried out by listed private equity players have any long-term effect in reducing the share price discount to NAV.

What are the tax advantages of a SCR (Société Capital Risque)?

Under French law, SCRs have full tax exemption for all income received and capital gains realized by the SCR. Consequently, as an SCR, Altamir does not pay corporate taxes.

What is the impact of the French tax reform of 2013 on Altamir?

Given its status as an SCR, the French tax reform of 2013 has a negligible impact on Altamir.

What is the advantage of the SCR status for investors?

The shareholders of a company with SCR status may be exempt from tax under certain conditions. Individual investors who reside in France and commit to hold their shares and re-invest the dividends for five years, do not pay capital gains taxes on dividends, nor do they pay capital gains taxes when they sell their shares, assuming they comply with the five-year commitment. Individual shareholders who reside outside France and make the same commitments, will not be subject to withholding tax. Legal entities residing in France are exempt from tax on capital gains on disposal of Altamir shares held for at least 5 years, and exempt from tax on dividends which are derived from capital gains on sale of equity investments.

Further information regarding the tax benefits of SCR and the impact on French resident or non-resident shareholders are available in Altamir’s Registration Document.

What are the eligibility requirements for the SCR tax status ?

The main rules and restrictions that apply to SCRs are the following:

  • The sole purpose of the SCR, barring exceptions, must be the management of a portfolio of securities.
  • The SCR must have at least 50% of its net book value invested at all times in non-voting equity securities, shares or securities giving access to shares issued by eligible companies:
    (i) whose shares are not publicly traded;
    (ii) whose registered office is located in a European Union Member State, Norway, Iceland or Liechtenstein;
    (iii) engaged in industrial or commercial business activities (as described in Article 34 of the French Tax Code), excluding non-commercial activities;
    (iv) that are subject to corporation tax or would be subject to the tax if they engaged in the same activities in France under the same conditions (newly established companies exempted from corporation tax may also be eligible).
  •  The SCR may not hold more than 40% of the voting rights in an eligible company as a result of its shareholding.
  • An SCR may not invest more than 25% of its net book value in securities issued by any one company.
  • The SCR’s cash borrowings may not exceed 10% of its net asset value.
  • No individual may have, together with the individual’s spouse, ascendants and descendants, directly or indirectly, rights to more than 30% of the net income of the SCR.
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