Alpha Associates came into being on 1 April 2004. How did that decision come about?
It goes back to the developments within the Swiss Life group over the last two years. After a strategy review, Swiss Life decided to concentrate on its core businesses of life assurance and traditional asset class management and move away from private equity asset management for third parties. From the team's perspective it was quite difficult to see how things would work in the future – operating within a parent company that had no desire to be in the asset class, it would be very difficult to grow the business in the marketplace. So, when that decision was made, it was clearly in the interest of both parties to spin out the business.
What will be the biggest differences for the operation going forward?
I think the main thing is that we now have the opportunity to really grow the business, which we did not have within Swiss Life. We now have full discretion over strategy issues, and because the decision-making process will be more efficient than in a large organisation with complex procedures, we will be more dynamic. Our number one priority will be to continue to provide a good level of services to our existing clients. After that, we'll be looking to grow our fund of funds business and acquire new mandates.
What differentiates Alpha Associates?
We were confronted with having to restructure Private Equity Holding, which had serious liquidity problems when the management was taken over by Swiss Life. From this, we have gained significant expertise in restructuring private equity portfolios. We also have experience in investing in private equity in Central and Eastern Europe through 5E Holding. Going forward, we want to provide tailored private equity solutions to large institutional clients and launch funds of funds with specific investment themes.
What is the current status of Private Equity Holding?
The restructuring of Private Equity Holding has now been completed, and today the company has a debt-free balance sheet and a mature venture portfolio with reduced investment commitments. Over the last 12 months, we have seen a very positive development of Private Equity Holding's share price.
What's your track record in Central and Eastern Europe?
When we started out with 5E Holding, an evergreen structure currently capitalised at SFr120 million (€77 million; $93 million), it was a relatively immature marketplace. We started in October 1998 and have developed a deep knowledge of the market, region and people. Like everyone else, we've learned our lessons. And we're certainly seeing a much more mature private equity market there today.
What have been the biggest changes in that region?
A few years ago there were no fund managers with a track record – very few managers had raised a second fund, everyone was on a first time fund and no one had gone through the whole investment cycle. Today, the market has consolidated and you can look at people's long-term track record as they're on to their third or fourth fund. The types of investment opportunities have changed also from mainly privatisations and early stage expansion/start-up capital in the early- and mid-90s to a growing number of investments that are buyouts or involve later stage expansion funding.
So what happens after the accession date of 1 May 2004?
The actual accession is only a milestone in a process that started years ago. It has been an expected event for quite some time and a lot of the positive factors associated with EU entry have already happened in those countries. That said, it's a positive development and I think accession will put the region on the map for a certain group of investors who a few years ago wouldn't have invested in it.