Equity-backed companies broaden their investment opportunities
Private equity refers to equity investments in unlisted companies. It can be used to develop new products and technologies, expand working capital, carry out acquisitions or strengthen a company’s balance sheet. Private equity can also resolve ownership and management issues like succession in family-owned companies or the buyout or buy-in of a business by experienced managers.
Fortis Private Equity helps companies meet their financing needs through equity investments and buyout transactions, which constitute by far the largest segment within the private equity industry. Our solutions ensure continuity and create shareholder value.
We provide equity capital through:
Fortis Private Equity seeks influential minority or controlling stakes, independently or with co-investors. In addition to providing capital, Fortis Bank delivers managerial and strategic support to the companies invested in and their management. Fortis Private Equity operates through dedicated local business teams in Belgium, the Netherlands, France and Spain.
Mezzanine finance is a hybrid form of capital, combining elements of both debt and equity. It comprises a long-term loan – between five and ten years – coupled with warrants.
The loan must be redeemed at the end of the term in one go. No interim repayments are required on the loan, but the company’s cash-generating capacity must be sufficient to meet the interest charges.
Warrants give the mezzanine financing provider the right to buy a previously agreed percentage of the share capital at a predetermined price, in the event of a stock-market listing, for instance, or the sale of the company.
Mezzanine finance is subordinated to regular bank credits, in terms of both redemption and security. It is the least expensive form of junior capital, the least intrusive for management and the least dilutive.
Mezzanine finance is a frequently used instrument in buyouts, where the current management takes over the company. It can also bridge the gap between bank credits and shareholders’ equity in the case of a management buy-in, the establishment of a new product line or distribution channel or even internal growth.
See also:
Mezzanine financing: to cover the gap between bank credit and venture capital.
Private equity funds often invest in relatively concentrated portfolios: 10 to 15 companies in a typical buyout portfolio, for instance, or 20 to 40 in a venture capital portfolio.
A fund-of-funds invests in a range of individual private equity funds, each of which might specialise in a particular type of private equity investment. This provides investors with a lower risk exposure.
BNP Paribas Fortis' Fund-of-Funds team has built a carefully balanced portfolio of private equity funds: venture capital, buyout, diversified and niche funds. It focuses on European and North American funds, and also invests in the Asian market.
See also:
The role of the private equity investor
From start-up to buyout