Private assets

Why Flexstone Partners for private assets?

October 25, 2024 - 6 min read

Eric Deram

Managing Partner – Flexstone Partners

There are numerous reasons why institutional investors - and increasingly, individuals - invest in private markets, that is to say, assets that are not listed or traded on stock exchanges. The main benefits of private assets to investors are:

The potential for enhanced performance. There is an illiquidity premium and additional alpha to be captured through long-term and active ownership which characterizes private assets investment.
Diversification. On one hand, investors can access a vast opportunity set of possible investments, and on the other hand, experience has shown that adding private assets to a diversified portfolio tends to improve the risk and return profile of such portfolio.
Lower volatility. Private assets are typically valued using discounted cash flow and other methodologies on a quarterly basis. Their valuation tends to be less volatile than publicly traded assets.
Active investment strategy. Private asset fund managers tend to be very hands-on, often controlling shareholders. This mostly solves the principal versus agent conflict.
Last but not least: ESG features. That long-term perspective allows investors to actively engage and influence ESG practices.

Of course, all these benefits come with associated risks:

Illiquidity. Private assets are long-term Investments that require special skills for sourcing and are more difficult to sell.
Cost. Private assets products typically have higher fees compared to listed products. The typical minimum ticket size has traditionally been too high for individuals.
Complexity. investing in private assets requires professionals with a deep experience of financial markets as well as extensive resource and processes.
Lack of standardization. Because private assets are not listed, valuations and reporting are less frequent, more complex, and not as standardized.

This is why private markets investing requires a specialist asset manager such as Flexstone to help investors source and select the best investment opportunities.

The world is private. We strongly believe that there is a significant investment opportunity in private assets going forward. To start with, specifically for private equity, it is estimated that 80%+ of companies globally are not listed, that is to say, they are private. Private equity funds provide vital equity financing to these real economy companies. Yet, total private assets on management still represent a fraction of publicly traded a on a global basis.

As a proof of that, the asset class has only steadily grown in recent years with a trend that does not seem to reverse.

On top of that, private equity is now opening to individual investors who represent more or less half of the financing capacity available.

The launch of flexible structures such as evergreen or open-ended vehicles and favorable regimes such as Eltif 2.0 should allow these investors to access these markets at scale. So, we expect the injection of individual investors’ money into private assets to further boost their growth.

Flexstone has several key differentiating factors. The first one is our strong proximity with our clients. More than 75% of our assets on management are bespoke portfolios that we have built in deep collaboration with a specific client and continue to manage as an evergreen SMA. Today, each member of Flexstone Partners team sees himself or herself as an extension of our clients’ investment teams.

Second, a focus on the smaller end of the mid market. We are a small and mid market specialist in private assets. We are laser focused and believe we can create more value in this segment of the market.

Third, we have a strong track record. With close to 500 funds in portfolio, 190+ co-investments completed since 2008, 70+ secondary transactions, we have demonstrated value for investors and companies in portfolio across various market cycles.

Fourth, we are truly global firm yet, with a local presence. In private assets, close proximity and relationships with both GPs and LPs is key to invest. With a team of close to 60 people with 25 years+ experience in private assets, we have developed an efficient network to source opportunities across the world, through our offices in Paris, Geneva, New York, and Singapore.

Another aspect that makes Flexstone special is that we are opening to all types of investors. As a private equity manager, we are well established in the institutional space. But we are now entering a phase where retail clients are in need to access private markets. To do that, Flexstone is currently designing solutions that will allow individuals to invest in private markets, with the benefits they present.

Last but not least, we are an affiliate of Natixis Investment Managers, which is one of the largest asset managers in the world, with 1.3 trillion of assets under management and over 15 specialized investment managers.

Flexstone Partners

An affiliate of Natixis Investment Managers

Flexstone Partners, SAS – Paris

Investment management company regulated by the Autorité des Marchés Financiers. It is a simplified stock corporation under French law with a share capital of 1,000,000 euros Under n° GP-07000028 –Trade register n°494 738 750 (RCS Paris)

5/7, rue Monttessuy,
75007 Paris

www.flexstonepartners.com

Flexstone Partners, SàRL – Geneva

A manager of collective assets regulated by the Swiss Financial Market Supervisory Authority (“FINMA”). It is a limited liability company with a share capital of 750 000 CHF.

Trade register n° CH-112-212.153

8 chemin de Blandonnet
Vernier 1214 Geneva
Switzerland

Flexstone Partners, LLC - New York

Delaware corporation, registered with the United States Securities and Exchange Commission as an investment adviser

575 Fifth Avenue, 22nd Floor
New York, NY 10017

Flexstone Partners, PTE Ltd - Singapore

OUE Downtown 2 #24-12
6 Shenton Way Singapore 068809

Natixis Investment Managers

RCS Paris 453 952 681

Share Capital: €178 251 690
43 avenue Pierre Mendès France
75013 Paris

www.im.natixis.com

This material has been provided for information purposes only to investment service providers or other Professional Clients, Qualified or Institutional Investors and, when required by local regulation, only at their written request. This material must not be used with Retail Investors.

In the E.U.: Provided by Natixis Investment Managers International or one of its branch offices listed below. Natixis Investment Managers International is a portfolio management company authorized by the Autorité des Marchés Financiers (French Financial Markets Authority - AMF) under no. GP 90-009, and a public limited company (société anonyme) registered in the Paris Trade and Companies Register under no. 329 450 738, Registered office: 43 avenue Pierre Mendès France, 75013 Paris. Germany: Natixis Investment Managers International, Zweigniederlassung Deutschland (Registration number: HRB 129507). Registered office: Senckenberganlage 21, 60325 Frankfurt am Main. Italy: Natixis Investment Managers International Succursale Italiana (Registration number: MI-2637562). Registered office: Via Adalberto Catena, 4, 20121 Milan, Italy. Netherlands: Natixis Investment Managers International, Dutch branch (Registration number: 000050438298), Registered office: Stadsplateau 7, 3521AZ Utrecht, the Netherlands. Spain: Natixis Investment Managers International S.A., Sucursal en España (Registration number: NIF W0232616C), Registered office: Serrano n°90, 6th Floor, 28006 Madrid, Spain. Luxembourg: Natixis Investment Managers International, Luxembourg branch (Registration number: B283713), Registered office: 2, rue Jean Monnet, L-2180 Luxembourg, Grand Duchy of Luxembourg. Belgium: Natixis Investment Managers International, Belgian branch (Registration number: 1006.931.462), Gare Maritime, Rue Picard 7, Bte 100, 1000 Bruxelles, Belgium.

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