When investing in listed companies, we use those approaches and methods of the private equity business that have been well-proven for decades. Topics and industries with particularly good medium-term prospects are the beginning of all our considerations.
Mellinckrodt German Opportunities is focused on stocks from Germany and Switzerland as its initiators have the biggest business experience in this region. In addition, the short distances allow us to pay the companies on-site visits and research their environment without linguistic and cultural barriers.
Value or growth is not the differentiator. Rather, it is crucial that the positioning of the companies in which we invest allows for the participation of the fund in the trends and topics that we deem attractive with a good opportunity-risk correlation.
Private equity buys companies that are so stable and established that banks are willing to partially finance the acquisitions.
Many listed stock corporations don’t meet the requirements of outside creditors as these companies lean more toward the field of venture capital. These types of transactions are too risky for private equity strategies – and, therefore, are not the focus of this fund.
We preferably invest with entrepreneurs and entrepreneurial managers who convince us with a business model that has been established over generations – as people in action. It is often reflected in the fact that the continuous development of their business is more important to them than the next bonus or the new company airplane.
You can guess what kinds of companies they are when you consider what it means that the average age of the companies held in the fund is at more than 90 years. Many companies were founded in the penultimate century but have managed time and again to reinvent themselves after big crises and, as a result, have kept their finger on the pulse of time. Another word for this is sustainability.
A part of sustainability and transparency is to systematically minimize counterparty risks:
- no cash holdings with counterparties with a low credit rating
- no certificates, structured products, or non-transparent custody chains
- no OTC hedging; preferred counterparty: Eurex
The fund invests concentrated: not hundreds of small equity stakes but rather approximately 30 companies along with flexible cash holdings form the portfolio.