Altamir - Registration Document 2016

1

FINANCIAL AND LEGAL INFORMATION

Business description

1.3.4 ALTAMIR’S CASH MANAGEMENT AND PERFORMANCE OPTIMISATION STRATEGY

The divestment forecasts are clearly uncertain, while the subscription commitments in the funds are irrevocable and give rise to significant penalties if the commitments are not met. However, the Management Company can use three mechanisms to meet unforeseen events: if there are insufficient divestment volumes: it can use available credit lines, itcandecidenottousethesumavailableforco-investments,or it can reduce the commitment made in theApax France IX-B fund from €306m to €226m; if there are excess divestment volumes: it can increase the volume of co-investments. Introducing co-investments into Altamir’s investment strategy gives the Company additional upward and downward flexibility to achieve its objective of being invested at 100% of its statutory net book value. In addition, the co-investments alongside the Apax Funds do not bear the management fees and carried interest for these funds. Instead, they form part of the management fees and carried interest due to Altamir Gérance and to Class B shareholders. Altamir is managed by its Management Company, Altamir Gérance, which is also the general partner. Altamir Gérance is advised on its investments by Apax Partners SA. Altamir and Altamir Gérance have no employees. Altamir’s management costs comprise: annual management fees; administrative and operating costs not covered by the management fee; and carried interest (performance-based remuneration). Since their creation, Altamir, Apax Partners SA, Apax Partners MidMarket and Apax Partners LLP have pursued a policy of deducting the transaction andmonitoring fees chargeddirectly to the portfolio companies fromthemanagement fees charged to the funds. Altamir’s investment process is in a transition phase. Since its creation in 1995 until 2011, Altamir co-invested alongside the funds managed by Apax Partners SA. Since 2011, Altamir has invested primarily via the funds managed by Apax Partners MidMarket andApax Partners LLP, with the option to co-invest alongside these fundswhen theopportunity arises. These funds are third-party funds in that Altamir Gérance has no economic ties with these two management companies. As of 31 December 2016, direct investments still represented 48% of the portfolio at fair value and investments via funds represented 52%. The transition phase is expected to last another two or three years andwhen it ends, investments via funds should represent over 80% of the Net Asset Value. 1.3.5 ALTAMIR’S MANAGEMENT COSTS CHARACTERISTICS OF ALTAMIR

CASH MANAGEMENT STRATEGY

One of the key challenges for a listed private equity company is its cash management. Unlike private equity funds, where the responsibility for cashmanagement is left to the subscribers (each new investment is financedby a call for funds fromthe unitholders and divestment proceeds are distributed immediately), listed companies finance new investments through their available cash, which is generated by divestments. A listed private equity company needs to avoid two pitfalls in its cash management: firstly, having too much cash, which could hamper its performance; and secondly, not being able to meet subscription commitments for the funds in which it has invested, which could result in the Company incurring heavy penalties or being required to seek external funds at unfavourable terms. Borrowing is one potential solution to this problem. Altamir considers this strategy to be a significant risk factor. In addition, its SCR ( société de capital risque ) tax status limits its potential to take on debt to 10%of its statutory net book value (around €57m at year-end 2016). Altamir’s financial strategy is to set up credit lines for the maximum amount allowed under tax regulations, but to only draw on these credit lines to meet potential timing differences arising between the receipt of divestment proceeds and investment payments. The Management Company considers that two conditions need to be met to optimise Altamir’s long-term performance: the ratio of the amount invested at cost/statutory net book value should be as close as possible to 100%; and investment quality should conform to the Company’s risk/ return investment strategy. To achieve these objectives, every three to four years, when new Apax Funds are launched, the Board of Directors of the Management Company and the Supervisory Board prepare a forecast of expected divestments for the next three to four years in order to determine the total amount that can be invested, taking into account requirements related to management costs and dividend policy. In 2015/16, the Boards approved the Management Company’s recommendation to invest €500m over the period 2016-19, allocated as follows: €306m in the Apax France IX-B fund; €138m in the Apax IX LP fund; and €62m in co-investments. This €500m investment does not imply that the credit lines will be used. ALTAMIR’S PERFORMANCE OPTIMISATION STRATEGY

46 REGISTRATION DOCUMENT 1 ALTAMIR 2016

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