Interview: Omnes Capital’s Fabien Prévost

Natixis, Allianz, Macif... French banks and insurance companies have been carving out their private equity arms at a steady pace over the past couple of years, egged on by regulatory constraints and a strategic focus on their core activities. With AXA's private equity unit also nearing a sale, captive funds are quickly going the way of the dodo.

Crédit Agricole Private Equity (CAPE) is among the latest to have somewhat reluctantly made a break for freedom: Coller Capital acquired the management company, along with half of the bank's investment in the funds it manages, at the end of March. The GP is now wholly-owned by Coller and operates under the new moniker of Omnes Capital.

Being part of a larger institutional group can have its downsides, and some former captives welcomed the new-found freedom from an overbearing parent that might have stifled their ambitions. But Omnes chairman and CEO Fabien Prévost does not look back in anger on his years as part of the Crédit Agricole group: "We are truly excited by the spin-off, but I must say we didn't actively seek to become independent. The goal 10 years ago was to build a powerful private equity unit within a large banking group, and in many respects we achieved this."

Omnes Capital comment on the excitement of spinning out and the challenges ahead

The fresh start will therefore see Omnes' strategy remain largely intact – the firm will continue to operate as a generalist fund manager active in most of the private equity space, including small- and mid-cap LBOs, venture and mezzanine. "We don't want to significantly alter our positioning," Prévost continues. "French (and in some cases European) SMEs are at the heart of our DNA and this is not going to change. Besides, the regional subsidiaries of Crédit Agricole are still significantly committed to our funds and this natural relationship will of course remain strong."

That is not to say that the only difference between Omnes and CAPE lies in the name. "The firm's culture will of course undergo some changes as well," says Prévost. "Becoming an independent structure is quite liberating in a way, and infuses everyone with a kind of entrepreneurial spirit that is hard to foster when you are part of a larger group." Another practical consequence of the spin-off is that Omnes will have to move away from the bank's governance model: "It used to be reassuring for our investors, notably with regards to risk control, but was perhaps not best suited for a GP," notes Prévost.

Building new relationships
The firm will also have to pitch itself differently to LPs as it starts cultivating new relationships. "Being called 'Crédit Agricole' used to open a few doors, but also close others – I believe that moving away from the brand will open more new doors to investors than it will close," notes Prévost. "The real impact is hard to measure, though. Many foreign LPs tend to react negatively to captive funds, for instance, while some French institutionals might have been attracted to the strength of the Crédit Agricole group."

Deeply reshuffling their LP base constitutes an extra challenge for former captives in an already tough fundraising market. Prévost acknowledges the steep climb ahead, but reckons that some parts of the business will require more effort than others: "We are very confident about fundraising prospects for our renewable energy vehicle. On the other hand, we know that the road will be tougher for our fourth mid-cap LBO vehicle – which we want to raise next year – so we are actively preparing for it."

On the dealflow side, Prévost doesn't anticipate the new branding to have a major impact on how Omnes is perceived by potential portfolio companies. "This will vary a lot on a case-by-case basis," he says. "In venture, for instance, entrepreneurs are focusing on the fresh capital and don't tend to care where it comes from. It doesn't play a significant role in majority LBOs either. For minority LBOs, it can be reassuring for family owners to have Crédit Agricole at their side, but Omnes should still benefit from the remaining ties to the group via our funds."

Roadmap for success
Two months after officially launching Omnes, Prévost believes the transition process has gone smoothly so far – and shares tips with potential spin-off candidates: "The main risk in a spin-off is for the management team to be too impatient, which can be perceived by the future shareholder as being contrary to its own interest. To that end we made it clear from the start that we wouldn't be looking to buy the management company straight away, which other managers in a similar situation did not do."

"We also stated that we would be discussing a future stake in the firm on the same terms with all the potential buyers, in a transparent manner, which is reassuring for everyone involved," he adds. Omnes' management team is aiming to gain control of the firm in due course and is currently in talks with Coller on that point.

Finally, Prévost once again insists on the fresh perspective required once a GP starts operating independently: "Once the transaction is done, one should not underestimate the in-depth changes required when you're not part of a larger group. You need to start from a clean slate and redefine your priorities between your staff, your investors, your leads, etc. This needs to be done quickly so as not to carry over practices that might not be suited to the new environment."

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• Topics
• France
• Industry
• Crédit Agricole Private Equity
• Coller Capital
• Omnes Capital