Altamir - 2018 Registration document

Business description and activities

Business description

A listed private equity company needs to avoid two pitfalls in its cash management: firstly, having too much cash, which could hamper its performance; and secondly, not being able to meet subscription commitments for the funds in which it has invested, which could result in the Company incurring heavy penalties or being required to seek external funds at unfavourable terms. Borrowing is one potential solution to this problem. Altamir believes that this strategy introduces a significant risk factor. In addition, its SCR (société de capital risque) tax status limits its potential to take on debt to 10% of its statutory net book value (around€58mat year-end 2018). Rather, Altamir’s financial strategy is to set up credit lines for themaximumamount allowed under tax regulations, but to only draw on these credit lines to meet potential timing differences arising between the receipt of divestment proceeds and investment payments. The Management Company considers that two conditions need to be met to optimise Altamir’s long-term performance: n the ratio of the amount invested at cost/statutory net book value should be as close as possible to 100%; and n investment quality should conform to the Company’s risk/ return investment strategy. To achieve these objectives, every three to four years, when new Apax funds are launched, the Board of Directors of the Management Company and the Altamir Supervisory Board prepare a forecast of expected divestments for the next three to four years in order to determine the total amount that can be invested, taking intoaccount requirements relatedtomanagement costs and dividend policy. In 2015/16, the Boards approved the Management Company’s recommendation to invest around €500m over the period 2016- 19, allocated as follows: n €306m to the Apax France IX-B fund; n €138m to the Apax IX LP fund; and n €62m to co-investments. This €500m investment does not imply that the credit lines will be used. The divestment forecasts are clearly uncertain, while the subscription commitments in the funds are irrevocable and give rise to significant penalties if the commitments are not met. However, the Management Company can use three mechanisms to deal with these uncertainties: n if there are insufficient divestment volumes: n it can use available credit lines, n it can decide not to use the sumavailable for co-investments, n it can reduce the commitment made in theApax France IX-B fund from €306m to €226m; n if there are excess divestment volumes: n it can increase the volume of co-investments. ALTAMIR’S PERFORMANCE OPTIMISATION STRATEGY

Introducing co-investments into Altamir’s investment strategy gives the Company additional upward and downward flexibility to achieve its objective of being invested at 100% of its statutory net book value. In addition, the co-investments alongside the Apax funds do not bear the management fees and carried interest for these funds. Instead, they form part of the management fees and carried interest due to Altamir Gérance and to Class B shareholders.

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1.3.5 ALTAMIR’S MANAGEMENT COSTS

CHARACTERISTICS OF ALTAMIR

Altamir is managed by its Management Company, Altamir Gérance, which is also the general partner. Altamir receives investment advice fromAmboisePartners SA. Altamir andAltamir Gérance have no employees. n Altamir’s management costs comprise: n annual management fees; n carried interest (performance-based remuneration); n administrative and operating costs not covered by the management fee. Since their creation, Altamir, Apax Partners SA, Apax Partners SAS andApax Partners LLPhave pursued a policy of deducting the transaction and monitoring fees charged directly to the portfolio companies from the management fees charged to the funds. n Altamir’s investment process is in a transition phase. From its creation in 1995 until 2011, Altamir co-invested alongside the funds managed by Apax Partners SA. Since 2011, Altamir has investedprimarily via the fundsmanagedbyApaxPartners SAS and Apax Partners LLP, with the option to co-invest alongside these fundswhen the opportunity arises. These funds are third- party funds in that Altamir has no economic tieswith these two management companies. As of 31 December 2018, the Company’s portfolio at fair value broke down as follows: n 20%co-investments (of which 9.5% relate to the three legacy investments alongside the Apax France VII fund and 10.5% to the five co-investments alongside the Apax France VIII, Apax France IX and Apax IX LP funds); n 80% investments through the funds. n Owing to the policy change in 2011, Altamir has two layers of costs: n direct costs; n indirect costs, i.e. the costs of the Apax France VIII-B, Apax France IX-B, ApaxDevelopment, ApaxVIII LP, Apax IXLPand Apax Digital funds, through which Altamir invests. n From an accounting perspective, Altamir has opted for full transparency as described in Section 1.3.2, unlike almost all other listed companies, which have opted to present the performance of their indirect investments net of management fees and carried interest.

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ALTAMIR 2018

Registration document