Like most private equity firms we run a series of funds for different markets and situations. As these are established we seek capital from both established investors and those who are new partners with us. Typically an investor will invest in one of the funds we manage and so becomes a limited partner in that fund, rather than an investor in the whole of BTM Capital. Hence he will only benefit from investments made in the specific fund where he is invested.
One starting point for new partners is often a fund of funds. This is a private equity fund that invests in other private equity funds, in order to provide you with a lower risk product initially. Rather than choose a specific fund you can spread your exposure across a number of vehicles, often of different type and regional focus.
At the other end of BTM Capital’s activities is the Initial Public Offering (IPO). This is the moment when private equity becomes public equity. Shares in a private company are launched on to a Stock Market so that any member of the public will then be able to buy or sell them. Typically this is not all of the shares in the company, hence IPO, but enough to establish a realistic valuation. This is the moment at which BTM Capital will activate its exit strategy, start to secure returns to its fund and provide its partners with their gains.
We will often be able to offer you, as a new partner, the opportunity to join in the excitement of an IPO. This will probably be a short term investment into the private equity shares before the IPO with an exit hours, weeks or months later.
Given that we interact with companies at all stages of their development and growth we have to be ready to provide then with our skills and services at any point. A minority share, venture capital investment in a company, still in initial product development, is sometimes a way of opening the door to investment ideas and then future, full scale equity activity.
As the relationship develops we may find that a merger or an acquisition may be the best way forward for a particular client company. We have a full set of M & A skills and market contacts so again we will provide guidance and capital as required. For our Private Investors this activity also represents an opportunity as we will certainly look to our own Funds for investment capital before approaching the general market. So a Private Investor could well help to re-fund a company as a start-up, then through an acquisition then on to an IPO and potentially even to further acquisitions once they are public.