General Atlantic finds new growth in Europe
US-based General Atlantic is among a number of bigger investors active in Europe proving that commitments to sustained long term investing with an SRI angle is capable of producing results.
General Atlantic (GA), the US-headquartered growth fund, made its first investment in Europe in 1988 and since then has committed nearly $4bn to some 40 companies across the region.
But in the last three years, supposedly the depth of a recession, there has been renewed interest. “We have found the recent environment good, there are some great companies in Europe and they are definitely growing,” said managing director Gabriel Caillaux (pictured). Since 2009, GA has made over $1bn in aggregate investments in Europe since 2009.
Despite the optimistic tone at the start of this year, political risk is still the biggest unknown and a significant factor since Europe accounts for some 25% of the fund, by activity. “We consider ourselves a bit of a contrarian investor, which has its own risks, but the biggest risk right now in Europe is political change, which will inevitably affect the economic outlook,” says Caillaux.
However, the firm is still actively seeking both companies to back, and investors. Founded in 1980 with funds from the fortune of Chuck Feeney, US philanthropist and co-founder of Duty Free Shoppers Group, GA’s strategy is underpinned by an ethos of long term engagement close to the “responsible” investing now rapidly gaining favour in the wake of the financial crisis.
GA, regulated in the US by the SEC, backs private firms with potentially global businesses, offering whatever corporate, financial or technical support they need to grow. There is no sector or geographic bias. In any year, just 10-12 companies are selected for GA support.
If the holdings are focused, the firm is even choosier about its investors. Caillaux, who joined in 2004 from Merrill Lynch, says GA’s founding principle of sustained, active investment is paramount. General Atlantic does not operate as a private equity investor with a typical fund structure, nor a multi family office, but incorporates elements of both.
“We take a stake, then add value by building the firm up, hopefully to a position of global leadership. As an evergreen fund, we have investors who understand that proposition, so we don’t have the renewal issues of cyclical investing. But we do like to sell to entrepreneurs because that is a way to sustain the company.”