Overall Portfolio
Diversification and performance
31 December 2023
Brederode’s portfolio consists of two distinct and complementary operational sectors: non-listed, or Private Equity, holdings, and listed securities.
The unique combination of these two portfolios allows optimal management of the liquidity risks linked to the uncalled Private Equity commitments while remaining fully invested overall.
Concentration of talents,
alignment of interests and creation of value
Private Equity
Brederode’s Private Equity portfolio consists mainly of commitments in fixed-term (10-12 year) associations usually referred to as Limited Partnerships, or simply Funds. The managers of these funds invest the called amounts in various projects which they then manage until such time as they resell (exit) them, which is typically after a period of 4 to 7 years.
The Brederode group chooses to participate in Funds that generally pursue a buyout strategy, in other words buying, through appropriate financial leverage (leveraged buyout), an interest – in principle, a controlling interest – in already mature businesses that have predictable cash flow and offer expansion or consolidation opportunities.
Brederode also analyses all opportunities for direct co-investment in certain projects identified as promising, in parallel with certain Funds.
Brederode’s Private Equity operations date back to 1992. With its extensive experience and its network of contacts, the Brederode group is able to focus on the most promising projects, led by the best teams of managers.
Mid and long term performance
For information, the performance of BREDERODE in Private Equity over the past ten years, drawn up in accordance with IFRS standards and based on net annual cash flows, is as follows:
| (in € million) | 10 years | 5 years | 3 years | 1 year |
|---|---|---|---|---|
| Value at the beginning of the period | 628,06 | 1299,70 | 2 343,73 | 2 636,65 |
| Cash flow during the period | -45,53 | -56,39 | -33,56 | 58,97 |
| Value at the end of the period | 2 873,57 | 2 873,57 | 2 873,57 | 2 873,57 |
| IRR (Internal Rate of Return) (1) | 16,6% | 16,3% | 6,5% | 11,3% |
(1) Internal Rate of Return (IRR) of the Private Equity portfolio calculated on the market value at the start and end of the period as well as the net annual cash flows.
The valuations at the beginning and at the end of the financial year relate to the NAVs reported in the IFRS-accounts on the basis of preliminary information available at the time of the closing of the accounts. The performance variances with the final valuations are not significant.
Advantages of the Private Equity
1. Alignment of interests of the parties involved
The interests of each of the parties involved are optimally aligned thanks to incentives put in place aimed at encouraging both the General Partners and the management of the acquired companies to maximise the return on investment for the shareholders over a period of generally four to seven years.
2. Long-term value creation
Since the companies remain private or become private further to their acquisition, their management teams are in a position to take strategic initiatives that may generate a temporary reduction in profitability, with a view to significantly improving the company’s valuation at the time of its sale. Such actions would be difficult to take for a public company as they could be interpreted as “profit warnings” and not as positive actions aimed at improving the performance of the company over the long term.
3. Optimisation of financial leverage
Companies backed by PE firms are able to fine tune their capital structure with an appropriate amount of leverage that optimally fits the business plan for the investment period.
4. Rigor and discipline
The board of a PE backed company, generally controlled by representatives of the General Partner, is focused on a number of KPIs, Key Performance Indicators. Such KPIs tend to zero in on cash metrics, on the progress of operational improvements, on the speed of execution of the business plan etc. and allow to spot and correct underperformance in the business very quickly. This focus provides significant downside protection to investors and gives comfort to the company lenders. The speed of reactions of companies subject to the discipline of Private Equity is a significant competitive advantage.
5. Talent
Because of the clear incentives based on tangible performance (IRR), PE firms are able to attract the best talent for both their own business and for the portfolio companies they acquire, for the ultimate benefit of their investors.
Breakdown by style
Current investments
31 December 2023
Uncalled commitments
31 December 2023
Geographical breakdown
Current investments
31 December 2023
Uncalled commitments
31 December 2023
Geographical breakdown of Private Equity activity in December 2023
(in € million)
Cash-flow trend
(in € million)
Breakdown of Private Equity investments by vintage year
Current investments
Uncalled commitments
Our main partners in Private Equity
The Carlyle Group
EQT
Ardian
Catterton Partners
HIG Capital
Providence Strategic Growth
Bain Capital
Vista Equity Partners
Genstar Capital
Alpine Capital
List of the main Private Equity managers
as 31 December 2023 (in € million)
| Names | Investments at fair value | Uncalled commitments | Total commitments |
|---|---|---|---|
| CARLYLE / ALPINVEST | 183,90 | 80,91 | 264,81 |
| EQT | 176,12 | 50,75 | 226,87 |
| HIG | 109,54 | 102,76 | 212,30 |
| ARDIAN | 128,96 | 63,50 | 192,47 |
| L-CATTERTON | 146,06 | 33,30 | 179,36 |
| PSG | 114,70 | 55,98 | 170,69 |
| BAIN | 95,39 | 50,59 | 145,99 |
| GENSTAR | 109,09 | 32,55 | 141,64 |
| VISTA | 95,99 | 40,99 | 136,98 |
| ARLINGTON | 106,29 | 18,35 | 124,64 |
| BV | 80,41 | 27,45 | 107,87 |
| AMERICAN SECURITIES | 68,41 | 32,85 | 101,26 |
| ALPINE | 60,35 | 40,85 | 101,20 |
| HARVEST | 72,99 | 27,97 | 100,96 |
| STONEPOINT | 75,27 | 19,28 | 94,55 |
| BC | 84,92 | 8,70 | 93,61 |
| GOLDMAN SACHS | 46,00 | 37,03 | 83,03 |
| PAI | 53,06 | 21,39 | 74,45 |
| UPFRONT | 64,83 | 9,47 | 74,31 |
| MONTAGU | 43,44 | 29,59 | 73,03 |
| CVC/GLENDOWER | 39,34 | 33,54 | 72,89 |
| MERCATO | 62,24 | 10,40 | 72,64 |
| JF LEHMAN | 54,71 | 17,21 | 71,92 |
| HGGC | 56,60 | 12,03 | 68,62 |
| TRITON | 52,34 | 15,66 | 68,00 |
| AUTRES | 692,63 | 321,48 | 1014,11 |
| TOTAL | 2 873,57 | 1 194,59 | 4 068,16 |
The top 25 General Partners included in this list represent 76% of total commitments.
The above assessment is based on the unaudited valuations as at 31 December 2023, covering 89% of the Private Equity
portfolio.
The above assessment is based on the unaudited valuations as at 31 December 2023, covering 89% of the Private Equity
portfolio.
Quality, diversification and liquidity
Listed securites
The listed securities portfolio focuses on around twenty high quality companies. It is rigorously managed in order to balance its defensive nature with the profitability, liquidity and growth objectives.
Breakdown of the listed portfolio
By industry
31 December 2023
Performance by investment and by industry as 31 December 2023
| Description | (€ mil) | % | |
|---|---|---|---|
| Technology | 365,83 | 8,2% | |
 | Alphabet Inc. operates as a holding company. The Company, through its subsidiaries, provides web-based search, advertisements, maps, software applications, mobile operating systems, consumer content, enterprise solutions, commerce, and hardware products. | 161,97 | 43,3% |
 | Relx PLC provides information solutions for professional customers across industries. The Company publishes information for the scientific, medical, legal, and business sectors. Relx serves customers worldwide. | 103,61 | 24,3% |
 | Microsoft Corporation is an American multinational computer and microcomputer company. Its principal activity is the development and sale of operating systems, software, and related hardware products. | 47,75 | 5,4% |
 | Samsung Electronics Co., Ltd. produces electronic products for consumers and industry, semi-conductors, PC’s, peripheral equipment, screens, televisions and household appliances such as air conditioners and microwave ovens. The company also produces internet access systems, telecommunication equipment and mobile phones. | 30,74 | -19,1% |
 | The company Intel develops, produces and sells IT-parts and related products. The main products are microprocessors, computer mice, integrated processors, microcontrollers and memory cards, graphic products, network and communication products, operating software, conference systems and digital imaging products. | 21,75 | -56,9% |
 | Prosus N.V. provides internet based services. The Company focuses on investment in internet, digital media, e-commerce retailing, and technology companies. Prosus serves customers worldwide. | 2,6% | |
 | Alibaba Group Holding Limited operates as a holding company. The Company provides internet infrastructure, electronic commerce, online financial, and internet content services through its subsidiaries. Alibaba Group Holding offers its products and services worldwide | -2,8% | |
| Financial services | 260,06 | 26,9% | |
 | MasterCard, Inc. offers payment solutions through its credit and debit services and payment programmes with financial institutions. The company also offers transaction services for debit and credit cards, transferable money, automated counters and traveller cheques. | 159,13 | 31,9% |
 | Royal Bank of Canada is a diversified financial services company. The Company provides personal and commercial banking, wealth management services, insurance, corporate and investment banking, and transaction processing services. Royal Bank offers its services to personal, business, public sector and institutional clients with operations worldwide. | 77,37 | 30,2% |
 | Experian plc is an Irish company listed on the London Stock Exchange. It markets customer relationship management data and tools worldwide, with a focus on credit risk, fraud prevention, marketing targeting, and decision automation. | 23,56 | -5,7% |
| Electricity | 216,23 | 12,9% | |
 | Iberdrola S.A. produces, distributes, commercializes and sells electricity in the United Kingdom, the US, Spain, Portugal and Latin America. The company specializes in clean energy, wind energy in particular. | 121,54 | 16,6% |
 | Enel SpA operates as an integrated electricity and gas distributions company. The Company generates, distributes, and sells electricity and gas. Enel also provides electric transportation and storage services. Enel serves customers worldwide. | 94,69 | 8,6% |
| Consumer goods | 208,72 | -3,1% | |
 | Unilever SA produces well-known brands and consumables such as food products, detergents, perfumes, hygiene and household products. The company is also listed on the London stock exchange. | 88,94 | 30,1% |
 | LVMH Moet Hennessy Louis Vuitton SE is a diversified luxury goods group. The Company produces and sells wine, cognac, perfumes, cosmetics, luggage, and watches and jewelry. | 79,06 | -15,1% |
 | Nestlé SA is an international company producing and selling a wide range of food products such as milk, chocolate, sweets, mineral water, coffee, cream, herbs and pet foods. | 40,72 | -19,5% |
| Miscellaneous | 177,10 | 9,2% | |
 | Brederode S.A. | 133,71 | 10,7% |
 | Siemens is a German conglomerate specializing in the energy, healthcare, industry and construction sectors. | 43,39 | 11,4% |
 | Sofina SA is an investment company listed on the Brussels stock exchange. | -2,9% | |
| Health care | 114,52 | 7,2% | |
 | Novartis AG manufactures pharmaceuticals and health care products for the general public, including medicine for the treatment of cardiovascular diseases, breathing difficulties and infectious diseases, internal and urological pathologies, products in the field of oncology, dermatology, eyesight, arthritis, vaccines, diagnoses and animal health. | 77,20 | 6,0% |
 | Sanofi is a worldwide pharmaceutical company focusing on the research, development and production of medicine and vaccines for the treatment of cardiovascular diseases, thrombosis, metabolism disruptions, tumours, the nervous system and internal medicine. | 37,32 | 7,5% |
| TOTAL | 1 342,45 | 10,1% |
Portfolio on 31 December 2023
| Securities (In € millions) | Number of shares | ISIN-code |
|---|---|---|
| Technology | ||
| Alphabet (C) | 883 611 | US02079K1079 |
| Relx | 2 367 465 | GB00B2B0DG97 |
| Microsoft | 117 700 | US5949181045 |
| Samsung Electronics (GDR) | 35 090 | US7960508882 |
| Intel | 1 127 000 | US4581401001 |
| Prosus | NL0013654783 | |
| Alibaba | US0160W1027 | |
| Financial services | ||
| Mastercard | 313 950 | US57636Q1040 |
| Royal Bank Of Canada | 667 300 | CA7800871021 |
| Experian | 567 000 | GB00B19NLV48 |
| Electricity | ||
| Iberdrola | 9 138 166 | ES0144580Y14 |
| Enel | 13 751 056 | IT0003128367 |
| Consumer goods | ||
| Unilever | 1 620 684 | NL0000009355 |
| LVMH | 124 403 | FR0000121014 |
| Nestlé | 511 872 | CH0038863350 |
| Others | ||
| Brederode | 1 204 575 | LU1068091351 |
| Siemens | 230 101 | DE0007236101 |
| Sofina | BE0003717312 | |
| Healthcare | ||
| Novartis | 819 200 | CH0012005267 |
| Sanofi | 398 100 | FR0000120578 |
(3) The “other holdings” item mainly contains listed securities distributed by certain Private Equity funds.
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