PARIS — The investment game just got a little bit spicier.
On Monday the multibillionaire Bettencourt Meyers family said its holding company Téthys has created a subsidiary through which it will invest in diversified business sectors.
The announcement came one month after Bernard Arnault and private equity player Catterton said they had agreed to join forces and form L Catterton, billed to be the world’s largest consumer-focused investment firm with more than $12 billion under management.
The scope and size of the Bettencourt Meyers’ investment vehicle Téthys Invest were not divulged, but no doubt it will pack a mighty punch. The family, including L’Oréal heiress Liliane Bettencourt, holds a 33 percent stake in the world’s largest beauty company. It is L’Oréal’s biggest independent stakeholder and France’s wealthiest family, with a net worth of $36.3 billion, according to Forbes. In 2015, the Bettencourt Meyers placed tenth in the ranking of billionaires around the globe. The Arnault family, with an estimated net worth of $34.9 billion, placed 13th.
Ariel Ohana, cofounder of investment firm Ohana & Co., of Paris, New York and Los Angeles, noted a rising trend of wealthy families setting up funds. He said they can serve numerous purposes, but generally a combination of diversification of assets or leveraging on expertise in the anchor company’s industry.
“[The latter] is typically the case when the family has sold its stake in the anchor company,” he explained. “Examples abound: The founders of Mexx [created] Fashion Fund after selling Mexx to Liz Claiborne and invested in Vilebrequin, for instance. The founders of Gerard Darel founded an investment vehicle [focused on] fashion.”
There also could be the non-economic consideration that a fund can employ some family members or educate them in the business of running a company.
Today, the time is ripe for more such investment funds to crop up, Ohana said.
“The current business climate is rather good and investing in companies is known as a ‘higher risk-higher return’ investment, compared to investing in bonds or real estate,” he explained. “Under different business climates, families’ strategies would be more defensive.”
Another factor at play is that numerous families already invested in private equity funds managed by third-party professionals, such as Blackstone or Carlyle, between 2002 and 2006.
“In 10 years they were able to see a full cycle: They saw the returns and were able to better understand how funds worked. So now they want to experiment on their own,” said Ohana. “It doesn’t mean they won’t continue investing in third-party funds, but a portion of what they will invest will go to their own family fund.”
Also alluring is that some families have seen others succeed with their own funds. Ohana cited as an example the investment of Louis Dreyfus’ Florac in SMCP.
Whether Téthys will take a majority or minority stake in businesses largely depends on the types of activities being targeted.
One industry expert said she assumes the Bettencourt Meyers will focus on the consumer segment, which could mean beauty — probably with an eye on more up-and-coming brands that may be too small for L’Oréal to invest in; food; beverages, and luxury.
“When diversifying in sectors they don’t know, families tend to take minority investments and opt for growth strategies, unless the family fund is managed by an investment professional with experience of control buy-outs,” said Ohana. “When leveraging their expertise in a sector they know well, they tend to acquire majorities.”
Alexandre Benais will become Téthys Invest’s chief executive officer. As deputy ceo in charge of finance and investment at the holding company Téthys, he will as of March 15 work alongside company chairman Françoise Bettencourt Meyers, the granddaughter of L’Oréal’s founder, and ceo Jean-Pierre Meyers.
Benais was appointed managing partner of Lazard in 2011 after joining the bank in 2005. Prior to that, he worked at Société Générale in Milan, New York and Paris. Benais is a graduate of ESSEC business school.
Téthys’ assets have not been made public.
Exemplaire, the men’s wear line introduced by Jean-Victor Meyers, Bettencourt Meyers’ son who sits on the Téthys board, was cofounded and self-financed with his friend Louis Leboiteux.