Conventional wisdom says private equity and family businesses don’t get on. Private equity is all about the short-term, often leveraged-based, returns, whereas family businesses are about long-term achievements and very little leverage. But family business dynasties, or those linked to these dynasties, have set up private equity groups themselves.
After all, they often know a thing or two about private businesses and can bring that expertise to deal-making and the management of the acquired company. The difference is all these family-backed private equity groups are more likely to be patient with their returns. They play the long-term better than the big private equity funds and that’s winning them more business.
Here are a few notable family-related private equity groups:
Alessandro Benetton, an heir to the billionaire family that owns the eponymous Italian clothing company, set up the private equity group 21 Invest in 1992. That makes him and 21 Invest one of the pioneers in the nexus between private equity and family capital. The group, which has its headquarters in the northeastern Italian town of Treviso, also has subsidiaries in Milan, Paris and Warsaw. 21 Invest has so far made around 80 investments in a wide variety of sectors, including healthcare, food and beverages, and logistic. It takes a long-term approach to investing, sometimes holding onto portfolio companies for longer than seven years.
Cofra Holdings, through its various investment vehicles, is one of the most active family-owned private equity-focused investment groups anywhere. Cofra is owned by the Brenninkmeijer family, a German-Dutch dynasty, which made its fortune in textiles and clothing and is associated with the family’s ownership of the big retail fashion chain, C&A. The family business can trace its history back many centuries, although C&A began in the 19th century.
Cofra’s investment businesses are split up between Redevco, which handles a big real estate portfolio across Europe. Then there are a series of private equity businesses spread across Europe and North America. Rather than concentrating on one private equity-focused business, seven individual businesses are covering different regions and parts of the private equity world. That said, all these businesses sit under the Bregal Investments umbrella.
The seven businesses – Bregal Freshstream, Bregal Unternehmerkapita, Bregal Partners, Bregal Energy, Bregal Sagemount, Bregal Private Equity Partners, and Birchill Canada – all raise their own funds. There is also another London-based private equity group called Bregal Milestone.
EQT is one of the best performing private equity groups in Europe. Launched in 1994 by the Wallenberg family through their holding group Investor AB, the family is still the biggest shareholder in the group. Other early backers included a US private equity group, the Swedish bank SEB, and a group of private investors. Last year, due to its success, EQT listed on the Nasdaq Stockholm. EQT has raised more than €60 billion in 28 funds, many of them achieving top quartile performance.
Set up in 2005 by John Pritzker, a member of the extended Pritzker dynasty in America, Geolo Capital specializes in private equity investments in hospitality and lifestyle businesses. As it says on its website, it has “expertise in consumer-facing businesses”. Geolo has built upon the Pritzker family’s big links with the hospitality world through the family’s past holdings in the Hyatt Hotels Corporation.
The private equity group of billionaire Ernesto Bertarelli, whose wealth is based on the sale in 2007 of the pharmaceutical group Serono, which Bertarelli’s grandfather founded in 1906. Kedge Capital invests mostly in asset management groups. It tends to take majority stakes in businesses and says it follows a long-term investment strategy in terms of returns.
Koch Equity Development
Kansas-based Koch Industries is the third biggest privately controlled family business in the world in terms of revenues. Members of the Koch family also own Koch Equity Development, which is probably best described as a hybrid private equity/investment office/corporate venturing business.
But unlike most other private equity groups, it doesn’t raise funds – all the money comes from Koch Industries – and that money runs into billions of dollars annually. This makes it one of the biggest corporate venturing/private equity businesses linked to any family business in the world.
KED’s strategy is to take minority and majority stakes in sometimes family-controlled businesses. These businesses can be complementary to Koch Industries existing companies, what KED calls “tuck-in” acquisitions, or “new platform” acquisitions, which are designed to extend the Koch franchise. And being a family business, Koch Industries uses KED as a way to invest in family capital with an eye on longer-term returns.
Bernard Arnault and his family, better known for his ownership of the world’s biggest luxury group in terms of revenue, LVMH, merged a few years ago its private equity group L Capital with a US competitor, Catterton. The new firm was rebranded L Catterton, and Arnault and his family have a 40% stake in it.
The legacy businesses along with L Catterton have made more than 200 investments in consumer brands across all segments of the consumer industry. L Catterton looks to acquire minority and majority stakes in middle-market companies and emerging high-growth enterprises. It claims to be the biggest consumer-focused private equity group in the world.
Pritzker Private Capital
Pritzker Private Capital targets minority and majority stakes in middle-market companies, many of them family-owned. Set up in 2018 as a stand-alone entity separated from brothers Tony and J.B. Pritzker’s family office, The Pritzker Group, PPC deploys the family’s capital alongside money from other families.