Altamar holds its Annual Investors’ Meeting and the IV Global Alternative Investment Day in the year of its XV Anniversary
The day was attended by more than 500 investors including prominent figures from the world of alternative investment, as well as the entire Altamar management team in the year in which the firm celebrates its fifteenth anniversary.
Altamar’s Annual Investors Meeting and the IV Global Alternative Investment Conference was held in Madrid with the participation of outstanding speakers such as David Mackie, Senior Advisor on European and Global Thematic Research at J.P. Morgan, Michael Arougheti, Co-Founder, CEO and President of Ares Management, Raj Agrawal, Global Head of Infrastructure of KKR or Laurent Nguyen, CEO of Bionure (one of the portfolio companies of Alta Life Sciences). The conference not only covered the evolution of the different areas of the company and each of its funds, but it also analysed the global macro situation and its implications for the markets of the different alternative investment assets.
Claudio Aguirre, Co-CEO and co-founding partner of Altamar Capital Partners began his speech by thanking Altamar’s investors for their confidence which has made turning 15 years old and reaching approximately 7 billion euros of capital committed possible for the firm. The above mentioned was the result of the work of a team of more than 150 professionals and the firm’s ever-increasing specialization and internationalization.
Mr. Aguirre pointed out that alternative assets are experiencing a growth similar to the one of the pre-crisis years and “we see that the number of companies listed in the United States has fallen by 46% since 1996, while the number of companies acquired by Private Equity firms has not stopped increasing”. The rapid evolution of the funds industry, according to Mr. Aguirre, “brings us to an increasingly specialized and sophisticated market, where different investment strategies have been developed allowing investors to obtain a greater range of options and flexibility, while at the same time making it increasingly complex for them to define the composition of their investment portfolios on their own”. All of this makes Altamar very vigilant in pursuing “our due diligence processes and ensuring that we continue to obtain access to the best managers”.
One of the firm’s hallmarks, which has been maintained throughout its fifteen-year history, is its investment philosophy, which according to Mr. Aguirre is “focused on alternative assets, with a medium- and long-term perspective, maintaining at all times a patient and rigorous approach to capital preservation”.
The activity of Altamar’s Investment areas was later reviewed by each of the people in charge of each department. In addition, Mr. Aguirre highlighted the work of the Altamar Foundation, whose activity has been boosted over the last year with a large number of activities including volunteering, sponsoring, charity events and projects such as the publishing of the book “El mar en las colecciones del Museo del Prado” (The sea in the collections of the Prado Museum) in which the company celebrates its fifteenth anniversary.
Altamar’s new logo, unveiled during the meeting, is the result of an effort to update the brand’s image without losing its identity, but reflecting its growth, internationalization and specialization. Claudio Aguirre’s speech concluded with the presentation of a new video which reflects Altamar Capital Partners’ day-to-day activities, priorities and way of working.
The second speech of the day was given by David Mackie, Senior Advisor on European and Global Thematic Research at J.P. Morgan, who analysed the global economic outlook in his talk entitled, “The global economic outlook and implications for financial markets”. The talk highlighted the substantial growth slowdown in the global economy over the past year, driven by the fading of the US fiscal impulse, Chinese deleveraging, Brexit uncertainty and the direct and indirect effects of tariffs. The direct effects refer to the tax increase that tariffs represent, while the indirect effects refer to the impact on corporate confidence and spending. The global economy is now running close to its potential. It is hard to know what will happen next. Outside the US, there is little room for monetary easing and it is hard to judge when the corporate adjustment will end. Our baseline view is that global growth remains in the 2.5-3% range. Although the business cycle is mature, we do not expect a recession any time soon. The biggest risk to this view is a further escalation of the trade conflict.
According to Michael Arougheti, Co-Founder, CEO and President of Ares Management, a growing number of middle market companies are accessing financing through private credit markets. In his presentation, titled “Private Debt: from periphery to prominence”, he reviewed the evolution of this market and argued in favour of private debt as a financing instrument for corporates and an attractive financial asset for investors. The President and co-founder of Ares Management revealed some of the key elements of their sourcing and investment process that have been critical ingredients of their firm´s long lasting and successful track record.
Altamar’s Private Debt area was introduced by José Maria Fernández and Rodrigo Echenique, Partners of Altamar Credit. They highlighted the main features of Altamar’s first Private Debt fund, Altamar Private Debt I. The fund with a size of 234 million euros, is currently invested in 20 funds (9 Senior Loans and 11 Direct Lending) and over 125 companies in its mid-market portfolio offering investors a diverse exposure to performing corporates in the main economies of Europe and in over 15 industries.
Another speaker during the event was Raj Agrawal, Global Head of Infrastructure at KKR, who from his own experience reviewed the future of infrastructure assets in a panel entitled “Infrastructure: Investment opportunities in a highly Dynamic sector” moderated by Claudio Aguirre and Ignacio Antoñanzas, Founding Partner of Altamar Infraestructuras. In Mr. Agrawal’s opinion, the sector is under-funded, so there are very interesting opportunities. Between 2000 and 2008, fund investments in infrastructure have gone from representing less than 1% in alternative asset portfolios to 10% due to the attractiveness of this asset class.
At the end of the panel, Ignacio Antoñanzas spoke about the evolution of the infrastructure funds managed by the firm. Firstly, the Altamar Infrastructure Income I fund has a total size of 356 million euros and has already made 25 commitments (in the primary, secondary and co-investments markets) representing an investment in more than 140 companies in different strategies and vintages and a high level of diversification in both geography and sector, business model and investment strategy. As a whole, the fund has a very attractive return that generates recurrent dividends from the outset, obtaining net returns for investors in line with the expectations set and without J curve, always placing emphasis on operational management seeking to reduce the risk profile. Ignacio Antoñanzas also explained that in line with this first fund Altamar has decided to launch its second infrastructure fund, Altamar Infrastructure Income II, with a similar strategy and a target size of between 300 and 400 million euros. This second fund has already started its investment activity and has a good investment pipeline.
To finish his speech and introduce Fernando Olaso, Partner of Altamar Real Estate and Co-Manager of the real assets area together with him, Ignacio Antoñanzas presented a video with images and information of the different investments developed by both infrastructure funds and real estate funds.
Olaso explained that Altamar Real Estate’s strategy is based on three fundamental pillars: firstly, to be extremely selective in everything they do, seeking diversification as well as risk protection. Secondly, to apply value generation levers to achieve an expansion of the multiple in valuation. Thirdly, to protect capital through the use of reasonable leverage and by buying cash generating assets. Within this framework, he outlined the six key trends that have an impact on the real estate sector: growth of “leading” cities; growth of the real estate market related to the healthcare sector; awareness of “eco” and PropTech; consumers demanding “experiences” versus “things”, i.e. changing consumer preferences towards new experiences in the leisure and tourism sector; the impact of e-commerce, which is producing a resizing in the logistics sector; and finally a greater focus on efficiency and services of real estate assets.
As for the real estate fund business, Fernando Olaso pointed out that the Altan I & II funds are in the process of being divested, the Altan III fund (vintage 2014), is already fully committed to a diversified portfolio of 25 commitments between primaries, co-investments and secondaries. Finally, the Altan IV fund, which has 362 million euros of commitments from investors, is in the investment period with 25 very diversified commitments to date and in funds that are difficult to access.
Before lunch, Marcel Rafart, Partner of Galdana Ventures, talked about the firm’s activity in venture capital. This sector, according to Rafart, offers a very attractive risk-return combination for investors due to the recurring performance of the best funds to which Galdana Funds have gained access to. Galdana I, with a size of 275 million euros, completed its portfolio with 44 commitments spread over the United States, Europe, Israel and Asia and divestments are already taking place in underlying companies. Galdana II is in the placement period (currently with a size of 350 million euros) and follows the same investment strategy as Galdana I.
In the afternoon, the activity of the private equity funds was reviewed by Inés Andrade, Vice President and Partner, José Luis Molina, Partner, Co-Founder, Co-CEO, Co-CIO, Miguel Zurita, Co-CIO and Partner, Miguel Echenique, Managing Director and Partner and Ignacio de la Mora, Managing Director and Partner. All nine investment programs evolve very favourably not only in terms of valuation but also in terms of distribution to investors and the prospects of final return. There are two funds, ABE and ASO IV, which due to their maturity are already being liquidated.
To conclude this section Derek Snyder, Managing Director and Partner, together with Miguel Zurita and José Luis Molina discussed some of the advantages of investing in the secondary market where Altamar, with a value strategy, makes significant investments.
Investments in the secondary market continue to be attractive given that company valuations tend to be conservative. Secondaries enable a faster portfolio construction, shortening the holding period of investments and therefore anticipating distributions, and mitigating the “J curve” effect in valuation. They also provide a lower risk exposure since there is an opportunity to analyse an existing portfolio. The volume of secondary transactions has grown strongly in the last ten years, although the available capacity in the market has remained constant.
To close the event, Guy Nohra and Montserrat Vendrell, Partners of Alta Life Sciences, spoke of the evolution of the Alta Life Sciences I fund which has made a total of three investments in leading companies in the field of life sciences: Peptomyc, Mediktor and Bionure. Laurent Nguyen, CEO of Bionure, explained the type of research they carry out, focused on the development of drugs for the treatment of different neurodegenerative diseases for which there are currently no therapeutic options. Mr. Nguyen explained how investment in health sciences offers a unique model for both the financial return on investment and its impact on society and explained the life cycle experienced by a company in this sector from the start of a discovery until the different phases of the drug are developed to reach registration and final marketing.