Capturing Value in Private Debt Investments

Contributed by Marcus Evans, 13 March, 2014

Christophe Baviere of Idinvest Partners, a sponsor company at the marcus evans European Pensions & Investments Summit 2014, on investing in private debt.

Interview with: Christophe Baviere, Chief Executive Officer, Idinvest Partners

Montreux, Switzerland, March 5, 2014 - FOR IMMEDIATE RELEASE

“In the current marketplace, investors should consider increasing their asset allocation to the private debt segment, focusing on the lower end of mid-market companies where financing is not in competition with private placements or bond issues,” advises Christophe Baviere, Chief Executive Officer, Idinvest Partners. “They need to concentrate on the most inefficient components of the market where they can still capture good asset value,” he adds.

Idinvest Partners is a sponsor company attending the marcus evans European Pensions & Investments Summit 2014, in Montreux, Switzerland, 28 - 30 April.

In this economic landscape, what assets should investors consider adding to their investment portfolio? Why?

One of their biggest issues today is the reduction of interest, which is making investments less and less profitable on listed bonds. They have an appetite for assets that deliver returns relatively regularly or fast, but return from fixed income investments has slowed down.

To answer to this need, we propose investing in private debt. Private debt has two components: the mezzanine market and the senior loan market. Many large institutional investors have a relatively mature approach to private equity, but very few have an established approach to the private debt asset class. This is surprising to us, as there is no reason for that.

What expertise is required to invest in private debt?

To invest in privately owned mid-market companies in Europe, you must be fully dedicated to it. It is a patchwork made up of local constraints, networks and access. There is a large variety of legal structures and regulations to deal with, and the way business is done in each country differs.

Good news is that this segment of the market is not completely efficient. Information is not shared by everyone at the same time, but to be successful with mid-market companies, you need maximum access to information through different sources. You need access to deals through different angles to really deploy the best selection of investments. That is what we are dedicated to at Idinvest.

What do you look for in companies? What qualities or criteria are important?

To be successful in the private debt area, you have to deploy exactly the same analyses that banks do. Look at their profitability, stability of income, if they have tangible assets to back your risk. A disciplined investment process is the starting point.

However, this market is less transparent and efficient than listed markets. Large private equity backed companies like being in this investment universe because they do not have to communicate the same information that their competitors that are listed are forced to. Nevertheless, investors need access to that information and Idinvest is one of the best specialists in this area.

What Idinvest also does is invest in companies with a growth strategy - that is our investment style. In Europe organic GDP growth is very limited. Some countries are better than others, but none is booming. To capture growth in Europe, investors need to generate build-up, so we back companies that will use the money to finance build-up: to implement a buy and build strategy, private debt has a role to play.

For more information about becoming a sponsor please email: Jenny Keane, marketing manager, marcus evans, Summits Division

Tel: +1312 540 0333 x6161


Interview Conducted by: Sarin Kouyoumdjian-Gurunlian, Press Manager, marcus evans, Summits Division

Tel: + 357 22 849 313


About the European Pensions & Investments Summit 2014

This unique forum will take place at the Fairmont Le Montreux Palace, Montreux, Switzerland, 28 - 30 April 2014. Offering much more than any conference, exhibition or trade show, this exclusive meeting will bring together esteemed industry thought leaders and solution providers to a highly focused and interactive networking event. The Summit includes presentations on increasing fund resilience, establishing a robust risk framework, capturing investment opportunities and assessing the true value of emerging market investments.

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