A rising tide of alternative funds

More and more clients are looking for new investment opportunities. Louis Macalli and Florent Saint-Quentin, responsible for BIL’s range of alternative investments, explain to us why.

Alternative funds are all the rage. As classic investments no longer offer the desired returns, wealthy clients have discovered new, interesting ways of diversifying, that are less prone to usual market volatility. “With negative rate interest and declining returns on the majority of equity-based, guaranteed and non-guaranteed financial instruments, wealthy clients are developing a new appetite for alternative products like Private Equity, Real Estate or even Private Debt,” observes Louis Macalli, Head of International Coordination and Alternative Solutions. “It’s not uncommon for these assets to offer recurring returns of more than 10%, with the advantage of being uncorrelated to the stock market or other listed products.” What’s more, with alternative investments you invest directly in the economy, whether it’s on real estate projects or on up-and-coming businesses. “On one hand, heavily indebted governments are transferring this role of supporting businesses onto the individual. On the other, private investors increasingly appreciate being able to make an impact and help other entrepreneurs create value, by moving away from the basic buy-and-sell logic of securities,” explains Florent Saint-Quentin, Head of Alternative and Innovative Solutions.

Premium partners With this in mind, in 2018, BIL made the decision to innovate and develop quality products to meet this new demand. “It was about getting a foot on the ladder,” continues Louis Macalli. “We developed the expertise required for these types of products, and the arrival of our new shareholder, Legend Holdings, was a gamechanger.” Thanks to a partnership with Legend Capital, a major Private Equity player on the Chinese market, BIL launched its first alternative investment fund: BIL Private Equity I (or BIL PE I), a fund of funds. It promises shareholders longterm capital gains thanks to diversified investments in three funds managed by Legend Capital. The funds respectively target their investments in Chinese companies in the tech, media, telecommunications, healthcare, and semiconductor industries.

After this initial experience, in 2019 the Bank launched the BIL Real Estate I fund, this time in partnership with another highly reputable name, Quilvest Capital Partners. “In both instances, we looked for the best partner possible, combining expertise with a solid track record and that entrepreneurial flair which resonates with our clientele, especially with business owners and family offices,” explains Florent Saint-Quentin.

New products in the pipeline Entry tickets for these funds is 125,000 euros. Therefore, they’re aimed at wealthy clients, business owners and investors who all have the solid understanding required for placing some of their money in such solutions. “These alternative funds present a certain illiquidity. The investment horizon is between five to ten years, and you have to be aware that there’s always a risk,” adds Louis Macalli.

BIL is now exploring new avenues in order to expand its alternative suite. A second Private Equity fund with Legend Capital is being considered. “China is a market full of promise with a much more important expected growth than in Europe. We’re therefore considering a new, more diversified and international range,” reveals Florent Saint-Quentin. “Our goal is to scale up by capitalising on the experience gained since 2018 and, for this particular fund, take the role of Asset Manager,” concludes Louis Macalli, who sees alternative investments as a major topic in the years to come.

+14%

targeted internal rate of return for BIL PE I

+10%

targeted internal rate of return for BIL RE I