What is Swiss Re’s strategy for investment in private equity funds?
Swiss Re Private Equity invests in both buyout and venture in both the US and Europe across the board from small, regional venture players to mega buyouts. In the US, the firm concentrates on gaining access to top tier and established firms. In Europe, the focus is on firms that demonstrate they can provide top returns although here Swiss Re Private Equity is more inclined to look at less established players.
How do you gain access to these funds?
Swiss Re Private Equity has a pro-active approach. The firm is on the road all the time, both in Europe as well as in the US. It’s all about nurturing relationships. Also the Swiss Re brand name is very helpful as it is recognised worldwide. However, at the end of the day, it’s a people business, it’s about building trust and how you’re perceived from managers. Thanks to this approach in the past couple of years the firm has gained incredible access to many invitation-only funds.
How do you assess the risks
associated with firms you have
never dealt with before?
The firm tries to nurture relationships with fund managers well ahead before they are on the fund raising trail. It’s much easier to assess funds when they are not in a fund raising mode. Swiss Re Private Equity rarely invests in funds it has not known for a certain period of time and has an open door policy and encourages fund managers to constantly keep the firm in the loop.
What is your due diligence procedure?
It’s pretty standard but very thorough. Obviously some time is spent on the track record of the firm, undertaking on-site due diligence sessions where we spend time with the fund manager so we can see how they work. Swiss Re Private Equity puts a lot of emphasis on reference checks, doing at least 25 reference checks per fund with CEOs, co-investors and existing LPs. The length of the processes can vary. In terms of first-time funds and fund managers Swiss Re Private Equity doesn’t know that well, it can even take as long as between nine and 12 months. The firm really likes to get to know the
people well before making an investment
What, in your view, are the most important characteristics for a good fund manager?
Hunger and drive. Swiss Re Private Equity sees too many firms/people who have made a lot of money in the past and often they are lacking the incentive. That’s a really huge component in my opinion. Another thing that is extremely important is domain expertise and networks. Relevant experience is very important. Fund managers need to be able to help their portfolio companies and a deep understanding of a specific market/business and a broad network are key.
What are your views on European venture as opposed to buyouts?
I’m moderately optimistic; European venture is much more inefficient than US venture. In US venture there’s lots of competition; many companies get funded in the same market/segment and the margin for making mistakes there is very thin. In Europe, there are some very interesting clusters of technology, good management and fewer funds, many of which seem to have learned a great deal from the bubble days.
How do you source your funds? And how do find the best performers?
By being pro-active.
How would you describe the investment environment for institutional investors in private equity today?
It is challenging because there’s lots of money out there. Everyone is chasing the successful funds with the brand names. But Swiss Re Private Equity has a pro-active approach and because the firm spends a lot of time building trust with fund managers, that works in its favour.
Swiss Re Private Equity
Swiss Re Private Equity Holding started investing in private equity in 1995 in both buyouts and venture. The team is led by Harold Weiss and is composed of 15 individuals operating out of Zurich and New York. The team invests both proprietary as well as third-party capital and has commitments in over 120 partnerships worldwide.
Vincenzo Narciso: CV
Vincenzo Narciso is an Italian national who joined Swiss Re in 2002. His main focus is on investments in venture capital funds. Narciso previously worked at Adveq Management AG, a private equity fund-of-funds boutique, where he joined as the sixth employee and played an instrumental role in the start-up and early development phase of the firm.
Narciso also carried out an internship at Industri Kapital, performing analysis on the private equity markets of Italy and Finland. He currently sits on the advisory board of eight private equity firms in Europe and in the US and holds a Masters degree in Economics from the University of Milan, Italy and has studied at the University Pierre Mendes France of Grenoble, France and at UFSIA University of Antwerp, Belgium. He also holds an executive MBA from the Stockholm School of Business, Sweden.