Alter Equity obtained overall a very good grade, because it is an inspiring example of how investments can combine profitability and sustainability. The portfolio of the fund supports activities and behaviors that are fundamentally respectful of the long-term interests of nature and human beings while seeking an attractive return for its subscribers. Even if it is a relatively small fund, their portfolio is a great example that shows other bigger financial corporations that investing in businesses that rethink the economy around sustainable challenges can be profitable. Alter Equity is a model that needs to be followed and replicated. Even if their strategy lacks transparency, the results are impressive and opens the path to inspiring and sustainable initiatives in the financial world.
Alter Equity is a private equity firm based in Paris that has invested 34,5 MEUR in the capital of start-ups, SMEs, and mid-sized companies. Regarding the size of this fund, it is much smaller than what I am used to reviewing (OFI Green Future, Liontrust Sustainable Future), and indeed they have invested in relatively few companies. The small scale of the fund allows me to have a more comprehensive approach to the portfolio and therefore of their commitment; it is very exciting! First, one should be reminded that conversely to a usual fund, the very nature of a private equity business implies a stronger commitment to the companies in which they invest. Broadly speaking, the profit is made when a private equity firm buys shares of a company, then makes it grow and sell its shares (that are supposed to be worth more than what they bought). They aim to earn money by growing companies in which they invest. This approach is well suited for the sector of sustainability. First, because companies that try to develop sustainable business often need money to achieve their goals. Second, sustainable activities are likely to go through key transformations and revolutionary innovations in the decades to come, hence providing profitable opportunities to firms like Alter Equity. A win-win situation!
Focusing back on the object of our study, we can notice that the portfolio of Alter Equity is mainly directed to French companies and, as of July 14th, 2021, had a share in 14 different startups, each time representing between 1MEUR to 5MEUR of investment. Alter Equity doesn’t target a particular sector, indeed, companies of their portfolio are operating in various fields such as sustainable agriculture, employability, construction, electricity, education, circular economy, health, and mobilities. The companies in which Alter Equity invests have a positive impact both on the planet and on the people, providing an interesting balance between social and environmental commitment. They have invested 2,7 MEUR in Murphy, a company that repairs home appliances and sells reconditioned ones, aiming to reduce the volume of waste by encouraging recycling and fixing products instead of giving them away. Another 2,8 MEUR was invested in NED, which distributes renewable energy equipment, and 1,5 MEUR was given to Open Airlines, which developed software for eco-piloting aircraft to save paraffin and CO2 emission. They also have invested in companies that are innovating in mobilities for handicapped people, job platforms for interim or coding formation centers for adults that improve their employability. Overall, what I appreciate is their thorough engagement in investing in start-ups that rethink the economy and provide alternatives to what is offered by bigger corporations. Conversely to many other funds, they have fully embraced sustainability’s challenges, which underlines their understanding of the concept itself. Sustainability is not a box to tick, but a norm that needs to be at the root of each activity of a business.
Alter Equity is not on the stock market and represents private investor’s money, so they have no obligations to communicate on the strategy used to target investment. Likely, only the close surroundings of Alter Equity, such as investors and potential ones, are fully aware of what is going on. For a general audience, this is not shared. Except for briefly explaining that they are committed to sustainability and some basic financial criteria such as « they need to have growth prospect and a BP », there is no more information. It is disappointing not being able to investigate and reflect on the way investments are approached. Yet, how can I be critical when the portfolio that results from Alter Equity’s ‘secret’ strategy is that good? It necessarily implies that the method is good, and even maybe excellent. Yet, I believe that when a financial institution such as Alter Equity gives such hope in the future of sustainability’s evolution, they have a responsibility to speak up and give out their ‘secret’ recipe so that others could follow.
Alter Equity was founded in 2007 by Fanny Picard, who is now at the head of the fund. She has a working background in finance and started her career in large banks such as Rothschild. As the public figure of the fund, she often takes interviews and is very much engaged in communicating about the future of sustainable finance. She claims that she « wanted to build an investment model that supports the general interest in its social and environmental dimensions while allowing a profitability ». From my point of view, Fanny Picard seems dedicated to actively participate in the shift to a more sustainable economy. While running the fund, she is surrounded by a small team of 9 people that all have their profiles described on the official website of Alter Equity. What I like with the management of this fund is that, instead of having one professional of sustainability that makes sure the sustainable box is ticked, they have a team of finance professionals that all work together to rethink investment by adapting to the challenge of sustainability.