Private Equity in Swiss Wealth Management

Private equity refers to direct investments in privately held companies or projects that are not listed on public exchanges. In Swiss private banking and independent wealth management, private equity is recognised as a long-term, illiquid asset class offering access to growth-oriented enterprises, often with the aim of achieving superior returns. It is typically reserved for qualified investors, family offices, and ultra-high-net-worth individuals (UHNWI) due to its complexity and capital commitment requirements.

Swiss investors can access private equity through feeder funds, institutional funds, co-investment platforms, and increasingly via Actively Managed Certificates (AMCs). These vehicles allow access to sectors such as venture capital, growth capital, and leveraged buyouts. The asset class plays a crucial role in strategic asset allocation by adding a long-term performance engine and diversifier.

Key Private Equity Strategies

• Venture Capital (VC): Early-stage financing of start-ups with high growth potential
• Growth Equity: Capital for expansion in established, revenue-generating companies
• Buyouts (LBO/MBO): Acquiring control of mature firms through leverage
• Distressed/Turnaround: Investing in underperforming or undervalued assets to unlock value

Each strategy offers distinct return drivers and risk profiles. Therefore, portfolio construction should balance exposure across stages and sectors.

Accessing Private Equity in Switzerland

Swiss private banks and IAMs provide access to private equity via:

• Feeder funds: Pooled investor access to large institutional PE funds
• Fund-of-funds: Diversified portfolios of PE strategies across managers
• Direct deals: Club deals or co-investments often facilitated through family offices
• AMC wrappers: Bankable format offering PE exposure with ISIN-linked custody

Platforms such as GenTwo have made it possible to structure private equity allocations into AMCs, enabling custody within traditional bank accounts. This improves operational efficiency while preserving the essence of the illiquid investment.

Benefits of Private Equity

• Enhanced returns: Historically outperforms public markets over long cycles
• Access to innovation: Exposure to disruptive sectors and business models
• Control premiums: Influence over company strategy in buyout situations
• Low correlation: Often behaves independently from listed markets

Risks and Considerations

• Illiquidity: Capital is typically locked for 7–10 years
• Complex due diligence: Requires deep analysis of sponsors, markets, and exit potential
• Blind pool risk: In blind fund structures, investments are unknown at time of commitment
• High fees: Performance fees (carried interest) and management fees reduce net returns

Private Equity vs Hedge Funds and AMCs

Who Uses Private Equity?

• Family offices seeking long-term capital appreciation
• Private banking clients diversifying beyond listed markets
• IAMs allocating to thematic or regional growth stories

Example Allocation

In a CHF 10 million client portfolio, a typical allocation might be:

• 5% Growth Equity via a feeder fund
• 3% Venture Capital through a multi-manager platform
• 2% Buyout exposure via AMC structure (GenTwo)

This blend introduces innovation, higher growth potential, and diversification beyond public equities.

Conclusion

Private equity remains a cornerstone of long-term wealth creation strategies in Swiss private banking. With growing access through AMC wrappers and dedicated feeder structures, it is increasingly bankable. Careful selection and portfolio integration are essential to capture its full value while managing complexity and risk.

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