Unigestion targets an area of the private equity market that is difficult for investors to access or inefficient – small and mid-market global private equity. Since there are barriers to access, we believe this part of the market offers the greatest potential for superior returns, yet many investors need guidance before being able to participate fully in this market. At Unigestion, we have provided such guidance for more than 20 years.
The key success factors behind our approach are our deep knowledge of local markets, built up over many years of experience in Europe, North America and Asia, an extensive network of over 300 specialist investment partners, and our culture of commitment and ownership.
We offer clients access to some of the most exciting investment opportunities in private equity using three distinct strategies: primary investments in funds managed by leading specialist investment partners; secondary investments, focusing on small, non-auctioned high quality transactions; and direct investments in global small and mid-sized companies, investing alongside our network of investment partners.
The Unigestion Approach
Unigestion’s investment approach is to seek attractive returns from private equity investments, focusing on buyout, growth capital and carefully selected special situations in small and mid-sized companies globally, while seeking diversification of risk. We aim to deliver high returns, while mitigating risks through in-depth due diligence, prudent portfolio diversification, and focused monitoring of the investment portfolio. Unigestion combines different investment opportunities to minimise the J-curve effect, maximise returns and increase portfolio diversification.
PRIMARY INVESTMENT STRATEGIES
Through our global network of specialised investment partners, Unigestion offers access to untapped investment opportunities in the small and mid-market. We target leading national and regional private equity managers with deep knowledge of their target markets and proven access to attractive deals.
We look for entrepreneurial teams pursuing differentiated strategies with a history of creating above-average growth or value through operational improvements and development, organic or external growth. The transformational capacity of these managers allows them to adapt to changing market environments and develop strategies that deliver the best potential returns at any given stage in the economic cycle. As a consequence, our investment performance tends to depend less on the macroeconomic environment than many of our competitors.
Unigestion’s primary investment strategy is based on the following approach:
- Focus on smaller and medium-sized funds, as well as first-time funds in selected programmes
- Targeting leading fund management teams with deep knowledge of their target markets and proven access to attractive deals
- Look for strategies that deliver the best potential returns at any given stage in the economic cycle
SECONDARY INVESTMENT STRATEGIES
We leverage our integrated global investment platform to focus on small, non-auctioned, transactions. The focus on smaller deal sizes ranging from USD 5 to 30 million allows us to benefit from limited competition. In turn, this means our secondary investment strategy is largely unaffected by market volatility in terms of pricing and volumes.
Secondary investments include the purchase of limited partner interests in mature funds, restructurings of funds where multiple LPs are seeking a liquidity solution, and structured transactions where a specific solution is required in order to purchase a portfolio of companies or secondary directs which involves the acquisition of one or more companies out of a portfolio.
Thanks to our extensive network as well as our reputation as a reliable long-term investment partner, Unigestion maintains a strong, high-quality deal flow. In addition, our investment team often gains early and sometimes exclusive introductions to potential sellers of private equity assets.
In this space, Unigestion deploys extensive direct and primary investment knowledge to intensively evaluate the portfolios and be able to execute transactions swiftly.
Unigestion’s secondary investment strategy is based on the following approach:
- Focus on small, non-auctioned transactions
- Target high-quality assets using fundamental analysis to value each single company from the bottom up
- Search for future upside potential in private companies which are intrinsically undervalued or where exits are imminent
- Actively hunt for possible discounted deals where they are driven by the market environment or the specific situation of the seller
Unigestion’s fourth dedicated secondary fund (USO IV) seeks opportunities where high-quality assets can be acquired at attractive valuations, with a focus on small and middle-market funds, fund restructurings, secondary direct portfolios and structured transactions. It has a net return target of 1.6x cost / 20% IRR.
The Euro Choice Secondary investment programme replicates the secondary strategy of the Euro Choice investment programme, but is offered on a stand-alone basis. Our distinct sourcing approach, proactive targeting of sweet spot fund investments, and the current market environment are expected to deliver primary-like cash-on-cash returns while still providing for the well-known secondary features of optimised IRR and J-Curve.
DIRECT INVESTMENT STRATEGIES
Unigestion is convinced that the most attractive private equity returns can be achieved by investing in those private companies with the potential for good growth and real operational improvement. The focus is on businesses where we see potential for significant value creation, whether from market consolidation, the roll-out of new products or technologies, or any other reason we identify. In our experience, this is often best found in small and mid-sized companies where, in the private equity market, entry valuations are lower and leverage is therefore more reasonable.
Unigestion’s direct investment strategy is based on the following approach:
- Target small and mid-sized companies around the world which our analysis suggests should generate good growth and real operational improvement
- Source the best global investment opportunities, working with select industry experts and our specialist investment partners
- Conduct independent and rigorous due diligence
Unigestion Direct Opportunities 2015 will pursue investments globally in companies that operate in the small and middle market, typically with enterprise values in the range of EUR 100-500 million. The fund is seeking to raise EUR 200 million which will invest in 12-15 portfolio companies.
The Euro Choice investment programme seeks ‘value’ and ‘industrially’ driven investment strategies in specific sweet spots identified on a country-by-country basis in Europe. Marrying this clear macro-driven view with a concentrated selection of fund picks will provide the basis for the macro- as well as alpha-driven outperformance of this investment programme. With the addition of single partnership and small portfolio picks in the secondary market, we optimise the risk return profile of the portfolio.
A significant portion of the private equity money Unigestion manages on behalf of its clients is invested in customised solutions. When building a mandate, we first confirm a client’s investment objectives, exposure targets and governance rules. In the second step, Unigestion uses its proprietary tool – the Private Asset Allocator – to determine the optimum portfolio allocation. Derived from academic research, this tool enables investors to decide upon their allocations based on specific objectives. Finally, we create and apply the strategy.
We provide our mandate clients with added value in the following areas:
- Early identification of business trends;
- Access to Unigestion’s investment process, designed to select managers with superior track records, value creation capabilities, and good sourcing networks;
- Regular review of underlying investments with a view to identifying underperforming businesses, operational synergies, add-on opportunities and exit ideas;
- Portfolio and cash flow planning.
INTEGRATING ESG CRITERIA
Unigestion can construct, integrate and manage a dedicated Environmental, Social and Governance (ESG) overlay across all its private equity strategies.