UPDATED. Armen, a private equity firm focused on GP stakes, hopes to help European mid-cap private equity firms gain access to hitherto untapped retail cash via its acquisition of platform Private Corner, president Dominique Gaillard told PE Hub Europe.
Armen completed its acquisition of a 20 percent stake – with an option to go up to 30 percent – in Paris-based Private Corner on 17 May. Private Corner works with wealth managers and financial advisors to help their clients access private equity.
The deal was at GP level rather than from its debut fund, Armen GP Stakes Fund I, on which the Paris-headquartered firm held a €150 million first close in March and made its first investment in April. The GP-level strategy means the private equity firms in which Armen invests will be able to access the Private Corner network.
Some of the larger firms in private equity are launching their own approaches to tap into private wealth, which is worth an estimated $80 trillion globally, Rashmi Madan, head of EMEA for private wealth solutions at Blackstone, told PE Hub Europe in a Q&A in November.
Madan said that the assets Blackstone handles on behalf of retail investors globally now stands at $236 billion, a “four-fold increase in the past four years”. But smaller firms are struggling to access this rich stream, said Gaillard.
“Every GP with whom we are discussing, every GP in which we invest, we can provide them the retail digital platform that will help them to onboard the retail investors of their country,” he said. “That’s essential and for the midcap GP players, they don’t know how to approach this.”
For the moment, Private Corner is a French platform, but Armen wants it to grow, with Benelux a likely first destination and Germany to follow, although Gaillard stressed that it was Private Corner’s responsibility to select funds – “we’ll never interfere with that”.
“We want to help them develop outside France, we’ll give advice, if necessary, but the selection of the funds they want to commercialise, that’s their decision. We are never taking any decision at investment committee – we are always a minority investment.”
While there are other platforms offering similar services in Europe, Gaillard said Armen was attracted to Private Corner because it had been profitable from “day one” and used wealth management intermediaries, rather than a straight business to consumer model.
The vast sums of private wealth now being accessed by the likes of Blackstone, as well as New York-headquartered iCapital, which offers a similar service to Private Corner but was founded back in 2013 and has platform assets of $156.7 billion, was a sign that European private equity’s access to retail is still in its “infancy”, said Gaillard.
By contrast, Private Corner has assets under management of €400 million, although it was only founded in 2020.
At the political level, the European Long-Term Investment Fund (ELTIF), introduced in 2015, was intended to allow institutional and retail investors alike to invest in long-term assets, including infrastructure, but met with only “modest success”, according to a report from EY. The European Commission in late November 2021 proposed an amendment – ELTIF 2 – that would make the vehicle more flexible, including allowing retail access to private equity.
“We see all the initiatives in Europe,” added Gaillard, who was chairman of private equity industry body France Invest from 2018 to 2021 and spent 22 years at Ardian, including as managing director. “The big GPs, they know now that they have to have access to the retail base.”
Editor’s note: This article originally stated that Armen’s stake was for 30 percent. It has been amended to say that the stake is 20 percent, with an option to go up to 30 percent.