Argentum is a major investor within the Nordic private equity market, and cooperation with fellow investors is an integral part of our investment philosophy. The private equity market is largely unregulated, and it is therefore necessary to impose restrictions or rules on any private equity manager one considers investing with. This is usually achieved through private agreements which are often elaborate documents that ideally should ensure that an investment relationship is well-balanced. In order to produce such well-balanced agreements, investors should join forces.
Selecting the best qualified managers is of paramount importance when investing in private equity. Research indicates that the average expected return of private equity investments is equal to what you may expect from similar investments in the public stock market. However, private equity investments entail much greater risk and are far less liquid. Yet, while it is difficult if not impossible to determine if a mutual fund may yield superior future returns, it is possible to distinguish top performing private equity managers.
The process of selecting the best private equity managers is often lengthy and challenging. It involves interviewing and analyzing the team, undertaking a thorough breakdown of the team’s results and track record, reviewing their proposed strategy, and ensuring that the team has previously delivered a number of crucial factors to their portfolio companies such as an active ownership component, clear and positive contributions to their development, and innovative and successful strategies, to mention only a few.
The process requires a considerable amount of resources and experience and also benefits from economies of scale. Argentum has since its inception specialized in screening managers and funds and currently cooperates with other investors in performing these tasks.
We have established investor programs (Nordic Private Equity Programme) to enable other investors to benefit from our market experience and capacity to undertake screening and to enable a sharing of some of the expenses such extensive screening efforts require.