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FINANCIAL AND LEGAL INFORMATION
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Risk factors
Nature of the risk
Risk mitigation
5) Risks related to new investments
Altamir runs the risks inherent in acquiring new investments,
specifically:
risks relating to assessing the strengths and weaknesses of the
companies, their growth potential, the relevance of their business
plan and the capacity of their managers to carry it out;
risks relating to an inaccurate estimate of the current value
of investments held in these companies and the growth potential
of these investments;
risks relating to the management of the Company prior to
its acquisition that were not identified during the pre-acquisition
due diligence, or risks not guaranteed by the sellers in the asset
and liability guarantees negotiated by the Company as part
of the acquisition;
risks relating to terms and conditions governing the financing
of the acquisition (e.g. increase in interest rates, activation
of accelerated maturity clauses);
risks relating to disputes that may arise with sellers or third
parties over the acquisition itself or the consequences of
the acquisition (e.g. suppliers, customers or banks terminating
the contracts that link them to the acquired company due to
the change of control);
risks relating to the insolvency of one or more companies in
which the Company invests (e.g. obligation to provide financial
support to the Company in question, loss equal to the acquisition
cost, receivorship or liquidation, personal liability claims) and the
resulting risk of litigation.
The investment processes implemented by Altamir and the Apax
fund management companies (see Section 1.3.7) and the systematic
use of the services of renowned auditing and consulting firms,
advisory banks and law firms, minimises the risks inherent in
investing.
Altamir and the Apax fund management companies have acquired
deep expertise over many years, enabling them to develop
and perfect the sophisticated processes mentioned above.
6) Risks related to the economic environment
Fluctuations in the economy may i) affect Altamir’s capacity
to invest, either directly or via the Apax France VIII, Apax France
IX, Apax VIII LP and Apax IX LP funds, in companies meeting the
selection criteria and to sell investments at satisfactory terms or ii)
erode the value of investments that it has or will acquire, as the
companies in question may be particularly sensitive to changes
in economic indicators, depending on the business sector in which
they operate.
By specialising in the economy’s most promising sectors and
selecting the sectors’ growth companies and leaders, Altamir
minimises the risks related to the economic environment.
The risk is also minimised through the geographical diversification
of the portfolio companies and the increasing internationalisation
of their activities.
7) Special risks related to leveraged transactions
A significant proportion of Altamir’s portfolio is composed of LBO/
LBI-type transactions which consist in acquiring an investment,
generally through a special-purpose holding company, with a bank
loan serviced by net cash flows (primarily dividends) generated
by the investment.
Leverage may be high on some of these transactions.
These transactions are particularly exposed to phenomena such
as a rise in interest rates or a deterioration of the target company
or its sector, making it difficult, even impossible, to service the
acquisition debt on its original terms. By their very nature, the risk
they present is far higher than average.
The debt ratios (overall debt/LTM EBITDA) are very closely
monitored by the investment teams and maintained at
conservative levels.
A significant portion of the financing invested in the holding
companies (LBO) are more often than not “bullet” loans, which
considerably lightens debt servicing costs during the holding
period, with debt being repaid when the investment is sold.
It is important to note that each LBO transaction is independent
of all other transactions. Any difficulties encountered with a
specific transaction have no impact on the other investments.
Altamir does not have recourse to debt to finance its investments.
As previously indicated, its status as a société de capital risque
(SCR) prohibits Altamir from incurring debt greater than 10% of
its statutory equity. A credit line is used as temporary financing.
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REGISTRATION DOCUMENT
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ALTAMIR 2016