Agefi Luxembourg - novembre 2024

T he LuxembourgPrivate Equity andVentureCapital Association (LPEA) held its annual conference on 17October, bringing together industry leaders and stakeholders todiscuss the la- test trends and insights in the Pri- vate Equity (PE) andVenture Capital (VC) Industry. This year’s edition focusedonoperational ex- cellence inprivatemarkets, high- lighting the importance of effective management strategies innaviga- ting the current complex environ- ment. Panellists explored innovative approaches to invest- ment, the integrationof technology, aswell as the evolving expectations of investors, underscoring the need for firms to adapt inorder to suc- ceed in an ever-changingmarket. Operational excellence in fund and portfolio management are central for driving growth and navigating the in- creasingly challenging market. Firms must adopt tailored approaches that moves beyond a one-size-fits-all oper- ating model, particularly in strategic areas like technology, innovation and clients servicing. Building robust relationships with teams and investors is essential, as it al- lows investors to understand the foun- dations of each business and fosters collaboration to support adaptation to changing market dynamics. The integration of artificial intelligence (AI) and data science can significantly enhance competitive advantage, en- ablingfirms toderive insights fromdata intelligence and effectively track evolu- tions. Establishing a robust data-based, technological architecture, while recog- nising the human role in fast-evolving situations, ensures a holistic viewof op- erations. KPIs remain crucial inmeasur- ing and reporting success in a sophisticated market characterised by consolidation trends. This multifaceted approach requires operational excel- lence in order to positions firms for sus- tainable success. Navigating theRegulatory Landscape: towardsValueCreation throughESGandCyber Resilience The journey from regulation to value creation in ESG can be challenging, par- ticularly in the early stages, but the long-term benefits can be significant. By focusing on value creation, compa- nies can unlock growth opportunities while appealing to environmentally- conscious investors. Regulations such as the Corporate Sustainability Report- ing Directive (CSRD) and the Sustain- able Finance Disclosure Regulation (SFDR) emphasise the need for robust ESG frameworks. Establishing proper procedures and re- sources to address ESG topics is thus needed. Firms should set clear targets, benchmark against peers, and adopt step-by-step processes for integration. Indeed, as companieswill improve their reporting practices, the quality of data will enhance, notably reinforcing attrac- tiveness to investors. This holistic approach will not only en- hance financial returns but also foster long-term sustainability, reflecting the current growing importance of ethical considerations. Embracing ESG princi- ples can indeed lead to a resilient busi- ness model that drives both economic and social value. On the cyber resilience scene, GPs and Board Members play a strategic role in ensuring digitally resilient momentum throughout the organisation and be- yond. Effective oversight and audit mechanisms are strategic. So is the pre- investment cybersecurity due diligence. Post-investment, it remains crucial to ensure that portfolio companies en- hance their cybersecurity posture and framework, safeguarding not only their assets but also the fund’s reputation. Implementing robust data protection measures and security controls is vital to address cybersecurity risks, which is even more applicable in the context of DORA. By prioritising cybersecurity governance, GPs can build cyber-re- silient portfolios, ultimately preserving the integrityof their investments and fos- tering trust among stakeholders where databreaches canhave significant reper- cussions on the company as a whole. Nurturing Investor Confidence in a Competitive Landscape In today’s selective market, building and nurturing investor confidence re- quires a multifaceted strategy empha- sising transparency and trust overtime. As investors increasingly seek diversifi- cation, the importance of metrics such as DPI and other KPIs cannot be over- stated. Effective liquidity management techniques and well-planned, success- ful exit strategies are central in demon- strating the company’s reliability. Investors desire to see tangible progress, making the narrative surrounding in- vestment journeys critical. Moreover, as investor strategies become more sophisticated and heterogeneous, it is important to recognise that this di- versity in investors’ strategies allow both large and smaller players to thrive. WhileAI can enhance operational excel- lence, it remains certain that the human factor is vital in the industry. By priori- tising transparency and engaging with investors, firms can cultivate lasting confidence, leading to stronger partner- ships and sustained success. In the field of Wealth Management, closemonitoring of these investments is key to ensure alignment with client ex- pectations. Integrating ESG criteria into the due diligence process is not just a best practice but a necessity, as ESG considerations shouldbewoven into in- vestment strategies from the outset. Wealth Managers also have a duty of preservation, safeguarding clients’ cap- ital while promoting responsible prac- tices, in order to align with sustainable considerations. Opportunities and Challenges in the VCMarket Adopting a multi-level approach in structuringVCFunds is interesting as it fosters (i) structural flexibility to allow adaptation to various investment strate- gies and market conditions (ii) investor protection including safeguards to en- sure transparency and accountability, and (iii) an appropriate taxation regime that incentivises investment. By consid- ering these levels, the Fund can effec- tively navigate the complexities of the VC market, driving growth and stabil- ity in the start-up ecosystem. In terms of challenges, fundraising in- tricacies were highlighted during the conference. Success seems to hinge upon offering differentiated value propositions and fostering stronger in- vestor relations. As the market antici- pates renewed momentum in VC fundraising, it becomes indeed essen- tial to focus on long-termvalue creation while building robust relationships with investors. Managers must approach a diverse range of investors, tailoring their invest- ment framework to meet varying ex- pectations and requirements. The management team plays a pivotal role in this process, as their experience and vision can significantly influence the decision-making process. In order to stand out, VC firms must differentiate themselves through unique insights and innovative approaches, ultimately aiming to build a diversified base of Limited Partners (LPs). In this dynamic context, effective due diligence processes play a central role for Business Angels (BAs) and VCs, utilising strategic KPIs to evaluate po- tential investments most effectively. While both BAs and VCs share impor- tant due diligence KPIs, BAs may pri- oritise metrics related to early-stage viability, while VCs might concentrate on scalability and market potential. Additionally, sustainability consi- der- ations at the due diligence level is be- coming increasingly important, as investors seek to align their portfolios with ESG standards. Insights in Private Markets: Evolution of Perpetual Funds, Strategic M&A Perpetual funds undergo a significant evolution in investment strategies, while promoting democratisation in fi- nance by enhancing accessibility and in- clusivity. With a trend towards retailisation, investors’ education is key to ensure proper understanding of the unique features and benefits of perpet- ual funds compared to other structures. Effective liquidity management tools are needed to balance accessibilitywith a long-term investment horizon, anddi- versification strategies are crucial for mitigating risk. By collaborating with wealth managers, fund managers can more effectively manage investor ex- pectations, ensuring clients are well-in- formed about the nuances of perpetual investments and their potential for sus- tainable growth. In the realmof M&Adeals, seizing op- portunities are at the core of creating success stories. Once the strategic part- nership has been initiated, it remains essential to grow the business while fostering the existing entrepreneurial culture to stimulate innovation and adaptability. By deepening customer relationships in understanding their needs, companies can further expand their market share while delivering quality service that meet customers’ expectations. Moreover, investments in technology can enable efficiency, allowing busi- nesses to maintain growth momentum while enhancing their capabilities. By focusing on these elements, organisa- tions can complement their offerings and secure long-term success. Conclusion In the ever-evolving landscape of pri- vate markets, operational excellence is notmerely an aspiration but a necessity. By embracing tailored strategies, foster- ing strong investor relations, andpriori- tising principles such as Sustainability, Transparency and Adaptability, firms can navigate the complexities of the market andposition themselves for sus- tainable success. As the industry continues to evolve, the commitment to operational excellence will remain a defining characteristic of those who wish to stay ahead in this competitive environment. EmilieMORAY, Legal&RegulatoryCoordinator,LPEA LPEA Insights Conference Operational excellence in private markets Novembre 2024 25 AGEFI Luxembourg Fonds d’investissement Luxembourg 0% 13/11/2026 EUR 95.54 95.75 -0.22% 96.0 95.5 Luxembourg 0% 14/09/2032 EUR 81.72 82.76 -1.26% 83.3 81.72 Luxembourg 0,625% 01/02/2027 EUR 96.3 96.4 -0.18% 96.77 96.1 Luxembourg 0% 24/03/2031 EUR 85.5 86.0 -0.59% 86.4 84.95 Luxembourg 1,75% 25/05/2042 EUR 82.5 83.65 -1.29% 84.97 82.2 Luxembourg 3,25% 02/03/2043 EUR 101.9 103.3 -1.37% 104.6 101.4 Obligations LuxXPrime Devise au 31/10 au 30/09 Var Plus haut Plus bas Vonovia 1,5% 31/03/2025 EUR 99.43 98.9 0.44% 99.44 98.75 DtTelekomIntlFi 1,375% 01/12/2025 EUR 98.65 98.5 0.06% 98.8 98.3 DBahnFinance 1% 17/12/2027 EUR 95.6 96.02 -0.44% 96.36 95.6 DtscheLufthansa 5,125% 12/08/2075 EUR 100.1 100.1 0.01% 100.4 99.44 Poland 3,25% 06/04/2026 USD 98.3 98.93 -0.57% 99.0 98.3 1HVWOp)LQ,QW EUR 89.55 90.56 -1.12% 90.72 89.55 Citigroup 3,3% 27/04/2025 USD 99.3 99.33 0.05% 99.3 98.72 6G]XFN,QWO)LQ EUR 97.5 97.63 -0.12% 98.1 97.0 VWFS 0,125% 12/02/2027 EUR 93.33 93.55 -0.23% 94.0 93.25 INTC 1.6 08/12/28 USD 88.1 89.6 -1.61% 89.6 88.1 Obligations vertes Devise au 31/10 au 30/09 Var Plus haut Plus bas WorldBk 2,5% 29/03/2032 USD 89.0 93.6 -4.99% 93.77 88.94 BEI 4,2% 21/08/2028 AUD 99.3 101.1 -1.75% 101.1 99.3 KfWA 0,75% 30/09/2030 USD 82.24 85.0 -3.25% 85.04 82.24 EON 0,35% 28/02/2030 EUR 87.5 88.23 -0.75% 88.52 87.1 UE 0,2% 04/06/2036 EUR 73.5 74.54 -1.38% 75.2 73.5 WorldBk 4,75% 14/11/2033 USD 102.9 106.7 -3.57% 107.0 102.6 Romania 5,625% 22/02/2036 Reg S EUR 98.64 99.4 -0.84% 100.1 98.64 WorldBk 4,4% 13/01/2028 AUD 100.0 101.4 -1.42% 101.4 100.0 MercedesBenzIFi 3,5% 30/05/2026 EUR 100.8 101.0 -0.17% 101.2 100.8 Poland 1,125% 07/08/2026 EUR 97.4 97.56 -0.08% 97.8 97.4 2EOLJDWLRQV OHV SOXV QpJRFLpHV Devise au 31/10 au 30/09 Var Plus haut Plus bas 7UNL\H USD 97.5 100.2 -2.64% 100.2 96.4 SiemensFinancie 1% 06/09/2027 EUR 96.03 96.64 -0.63% 96.82 96.03 Schaeffler 2,875% 26/03/2027 EUR 99.8 99.0 0.86% 99.86 98.6 GolSachsGr 2% 01/11/2028 EUR 95.8 96.82 -0.96% 97.16 95.8 6G]XFN,QWO)LQ )51 SS EUR 95.1 96.1 -1.07% 96.57 94.7 CMZB 0.1 09/11/25 EUR 97.94 97.5 0.44% 97.9 97.5 1HVWOp)LQ,QW EUR 95.9 96.0 -0.10% 96.1 95.7 RocheFinaEurope 0,875% 25/02/2025 EUR 99.3 99.1 0.26% 99.3 98.65 Hochtief 1,75% 03/07/2025 EUR 99.1 98.8 0.30% 99.4 98.8 UE 1% 06/07/2032 EUR 87.6 89.1 -1.69% 89.5 87.6 Actions luxembourgeoises Devise au 31/10 au 30/09 Var Plus haut Plus bas RTLGroup EUR 29.25 30.45 -3.94% 30.75 29.2 Luxempart EUR 75.0 77.0 -2.60% 78.0 72.5 SEO .prvB EUR 160.0 152.0 5.26% 160.0 159.0 ArcelorMittal EUR 22.6 23.54 -3.65% 23.75 21.84 Socfinaf EUR 12.3 11.8 4.24% 13.8 11.8 Socfinasia EUR 16.5 16.1 2.48% 17.1 15.8 Brederode EUR 107.2 113.6 -5.63% 115.8 106.6 ReinetInvest EUR 25.4 25.4 0.00% 27.0 23.6 Aperam EUR 24.94 28.14 -11.37% 28.56 24.82 SES FDR EUR 3.67 4.50 -18.45% 4.90 3.62 $FWLRQV pWUDQJqUHV Devise au 31/10 au 30/09 Var Plus haut Plus bas Brait ord EUR 0.08 0.08 10.46% 0.09 0.08 RobSGloStEqFd cat A EUR 79.0 77.0 2.60% 80.5 77.0 Rolinco ord A EUR 66.0 65.0 1.54% 67.0 64.5 FidRealEstate EUR 176.0 177.0 -0.56% 177.0 176.0 FiducOffSolut EUR 28.0 27.8 0.72% 28.0 27.8 Prosiebensat1Me EUR 5.65 5.82 -2.92% 6.28 5.62 Engie EUR 15.42 15.52 -0.64% 16.2 15.25 Vonovia EUR 30.1 32.73 -7.85% 33.73 29.9 VelcanHoldings ordinary shares EUR 15.0 14.7 2.04% 16.2 14.5 HellaGmbHKGaa EUR 86.8 85.8 1.17% 88.8 85.7 2EOLJDWLRQV GeWDW Devise au 31/10 au 30/09 Var Plus haut Plus bas Luxembourg 2,25% 19/03/2028 EUR 101.5 101.0 0.49% 102.0 100.8 Luxembourg 2,75% 20/08/2043 EUR 99.6 98.9 0.78% 100.5 97.93 Luxembourg 0% 28/04/2025 EUR 99.05 98.76 0.30% 99.06 98.7 Luxembourg 1,375% 25/05/2029 EUR 95.8 96.43 -0.64% 96.96 95.6 ©LPEA