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Carmignac Private Evergreen: Letter from the Fund Managers

Author(s)
Edouard BOSCHER,Megan Noelle CHEW,Alexis DE CHEZELLES
Published on
April 23, 2025
Read time
4 minute(s) read

Market environment during the period

Private Wealth
The private wealth market represents a substantial opportunity, with assets estimated at approximately $200 trillion globally1. Despite this vast pool of assets, private investors allocate less than 3% to private markets, compared to around 14% for institutional investors2. This disparity indicates significant potential for increased private market exposure among private investors. Semi-liquid funds have seen strong uptake in recent years, with an estimated global value of around $400 billion3.

Private Equity
Deal activity increased by 21% in 2024 compared to 2023, and by 45% above the pre-pandemic average4. The exit environment is seeing some signs of improvement, with distributions surpassing capital calls for the first time in eight years5. The rate environment is expected to support valuations further, with higher availability and lower cost of credit driving dealmaking.

Secondaries
In 2024, the secondaries market achieved a record-breaking transaction volume of approximately $160 billion6. This milestone not only underscores the rapid growth of the market but also surpasses the previous high set in 2021. The LP-led segment (consisting of investors deciding to sell interests in funds to other investors), representing 56% of the market, maintained its momentum throughout 2024, growing 41% year-over-year6. Liquidity pressure and a favourable pricing environment have prompted a diverse range of investors to turn to the secondaries market as a strategic tool for managing their private investment portfolios.

LP-led secondaries
Pricing for LP-led secondary deals remains relatively high, underscoring the need for discipline and non-price attributes such as speed and reliability of deal execution, as well as structuring to remain competitive. The convergence of bid-ask spreads appears to be increasing, driven by favourable investor sentiment4.

How did we fare in this context?

During the first quarter of 2025, the performance of Carmignac Private Evergreen was positive.

This performance is mainly due to the appreciation of the portfolio of Project Luigi, a LP-led Secondary deal exposing us to 12 mid-market companies across two funds managed by FSI, and Project Archimed, another LP-led Secondary deal arranged bilaterally with the seller, entailing the acquisition of a cherry-picked portfolio of 15 companies managed by a well-known French GP, Naxicap.

The positive value appreciation of Project Luigi included a realized exit generating a >3x return, and an uplift of 47% versus the valuation it was held at two quarters prior. The company saw transformational value creation during FSI’s tenure, including EBITDA tripling over less than a 2.5-year period, and the successful execution of a buy-and-build plan leading to 9 acquisitions.

The Q1 performance can also be attributed to the closing of two new opportunities, one secondary co-investment and one direct co-investment:

  • Project Bernabeu: Acquisition of 24 funds interests controlled by reputable managers in Europe and the United States. The diversified portfolio of 121 underlying companies and the attractive acquisition price (18% discount to the closing net asset value) are two of the main features of this transaction.

  • AHEAD7: A fast-growing technology consulting company helping large, blue-chip organizations to accelerate their IT transformation. The company is well-positioned to benefit from strong market tailwinds, with IT spending in the US projected to grow at c.9% CAGR from 2023 to 2028, as well as multiple value creation levers. The transaction was made at an attractive double-digit discount to NAV at closing, made possible through favourable buyer-seller dynamics.

Today, the portfolio offers exposure to more than 380 underlying companies through 9 transactions. It is highly diversified in terms of business sectors, geographies and vintages, with a focus on developed markets. Carmignac Private Evergreen is committed to a selection of high-quality assets acquired at attractive conditions with an average portfolio discount of 15% at closing compared to a market average of 6%8.

Outlook & positioning

Continued increase in sophistication and maturity of the secondaries ecosystem
Existing investors in Private Equity – typically institutional investors – are recognizing secondaries as an effective tool for managing their investment portfolio, be it to adjust their Private Equity exposure (e.g. to respect target asset class allocations), crystalize returns (e.g. to take profit once a target return is reached), or generate liquidity (e.g. to honour liquidity needs such as capital calls for closed-ended funds). In the current environment, rebalancing is especially important due to significant fluctuations in public markets. These movements can result in an increased exposure to private markets compared to the target allocation, owing to the Denominator Effect.

The overall sophistication represents a key driver for the secondaries market, facilitating the exchange of existing Private Equity investments, similar to how the listed stock market enables the exchange of listed shares. The rise of evergreen structures is also crucial in opening up the secondaries market to new potential buyers and sellers, facilitating secondaries’ transition to a mainstream investment option as well as a healthy, mature ecosystem.

Optimism for secondaries and mid-market private companies
The secondaries market is projected to grow significantly, with some forecasts estimating a market size between $500 billion and $1 trillion by 20309. This represents an exciting opportunity for high quality deal flow and for a broader investor participation in its value creation. 2025 also presents significant opportunities in mid-market private companies, given their propensity to be more agile, a key attribute in the face of a highly uncertain and fast-evolving environment. In the context of Private Equity investing, we see mid-market companies as also having greater exit optionality given their relative size (e.g. not being “reliant” on an IPO for an exit).

Finally, the nature of companies being private allows investors to remain focused on their fundamentals as well as the value creation thesis, while disregarding the transitory noise. Given our long-term perspective, as long as the investment thesis stays in-tact, a robust company will maintain its value creation and performance potential, even if it means potentially taking a little longer to achieve its target returns.

M&A outlook improving slowly but surely
With the ECB’s recent interest rate cut coupled with strong expectations for imminent cuts in the US, M&A deal activity is expected to gradually see a rebound after sluggish activity over the past two years. This is supported by narrowing valuation (bid-ask) gaps between buyers and sellers, paving the way for successful deal-making.

This dynamic gives us a cautiously optimistic outlook for 2025 buyout, buy-and-build, and exit conditions for Private Equity, though the effects might be somewhat stymied by the recent market turbulence and general uncertainty created by Trump’s indiscriminate global tariff impositions.

(1) BNP Paribas Exane Equity Research as of March 2024.
(2) Bain Private Equity Report 2023.
(3) Source: iCapital. The Future is Evergreen. The Next Generation of Private Market Funds.
(4) Pitchbook Q3 2024 Global PE First Look.
(5) Preqin, Annual Capital Called and Distributed.
(6) Evercore 2024 Secondary Market Review as of January 2025.
(7) The company is not directly hold by the portfolio.
(8) Jefferies 2024 Global Secondary Market Review.
(9) Quote from a panel during the PEI NEXUS 2025 event.

Carmignac Private Evergreen

Granting privileged access to diversified private equity opportunities
Discover the fund page

Carmignac Private Evergreen A EUR ACC

ISIN: LU2799473124
Recommended minimum investment horizon
5 years
Risk indicator*
6/7
SFDR - Fund Classification**
Article 8

*Risk Scale from the KID (Key Information Document). Risk 1 does not mean a risk-free investment. This indicator may change over time. **Sustainable Finance Disclosure Regulation (SFDR) 2019/2088. The SFDR classification of the Funds may change over time.

Main risks of the fund

Liquidity: Should exceptionally large redemptions be made, forcing the Fund to sell, the illiquid nature of assets might require the Fund to liquidate assets at a discount in particular under unfavorable conditions such as abnormally limited volumes or unusually wide bid-ask spreads.
Valuation: The valuation method, which is partly based on accounting data (quarterly or semi-annually computed), and the difference in lag with which NAVs are received from the General Partners, could reflect impacts on NAV with a delay. Moreover, NAV is sensitive to the valuation methodology adopted.
Discretionary Management: Investors rely solely on the discretion of the Portfolio Managers, and the level of transparency of the information available, to select and realize appropriate investments. There is no guarantee in the ultimate success of investments.
Limited control over secondary investments: Where the Fund makes an investment on a secondary basis, the Fund will generally not have the ability to negotiate the amendments to the constitutional documents of an underlying fund, enter into side letters or otherwise negotiate the legal or economic terms of the interest in the underlying fund being acquired. The underlying funds in which the Fund will invest generally invest wholly independently.
The Fund presents a risk of loss of capital. Please refer to the Fund’s prospectus to view the exhaustive list of risks.

Fees

ISIN: LU2799473124
Entry costs
4,00% max. of the amount you pay in when entering this investment. This is the most you will be charged. Carmignac Gestion doesn't charge any entry fee. The person selling you the product will inform you of the actual charge
Exit costs
5,00% Max. of your investment before it is paid out to you. 5% could be the maximum amount that may be charged to you. For A and I share classes, additional 5% could be the maximum amount that may be charged to you as the Early Redemption Fees if you request to redeem
your Shares within eighteen (18) months of the launch of the Sub-Fund.
Management fees and other administrative or operating costs
2,42% of the value of your investment per year. This estimate is based on actual costs over the past year.
Performance fees
15,00% of the Sub-Fund's positive returns subject to a five per cent (5%) Hurdle Rate. The real amount varies according to the
performance of your investment.
Transaction Cost
0,03% of the value of your investment per year. This is an estimate of the costs incurred when we buy and sell the investments underlying the product. The actual amount varies depending on the quantity we buy and sell.

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This material may not be reproduced, in whole or in part, without prior authorisation from the Management Company. This material does not constitute a subscription offer, nor does it constitute investment advice. This material is not intended to provide, and should not be relied on for, accounting, legal or tax advice. This material has been provided to you for informational purposes only and may not be relied upon by you in evaluating the merits of investing in any securities or interests referred to herein or for any other purposes. The information contained in this material may be partial information and may be modified without prior notice. They are expressed as of the date of writing and are derived from proprietary and non-proprietary sources deemed by Carmignac to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Carmignac, its officers, employees or agents.

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The Funds’ prospectus, KIDs, NAVs and annual reports are available at www.carmignac.com/en, or upon request to the Management Carmignac Portfolio refers to the sub-funds of Carmignac Portfolio SICAV, an investment company under Luxembourg law, conforming to the UCITS Directive. The French investment funds (fonds communs de placement or FCP) are common funds in contractual form conforming to the UCITS or AIFM Directive under French law.

  • In the United Kingdom: the Funds’ respective prospectuses, KIIDs and annual reports are available at www.carmignac.com/en-gb, or upon request to the Management Company, or for the French Funds, at the offices of the acilities Agent, Carmignac UK Ltd, 2 Carlton House Terrace, London, SW1Y 5AF. This document was prepared by Carmignac Gestion, Carmignac Gestion Luxembourg or Carmignac UK Ltd. FP Carmignac ICVC (the “Company”) is an Investment Company with variable capital incorporated in England and Wales under registered number 839620 and is authorised by the FCA with effect from 4 April 2019 and launched on 15 May 2019. FundRock Partners Limited is the Authorised Corporate Director (the “ACD”) of the Company and is authorised and regulated by the FCA. Registered Office: Hamilton Centre, Rodney Way, Chelmsford, Essex, CM1 3BY, UK; Registered in England and Wales with number 4162989. Carmignac Gestion Luxembourg SA has been appointed as the Investment Manager and distributor in respect of the Company. Carmignac UK Ltd (Registered in England and Wales with number 14162894) has been appointed as a sub-Investment Manager of the Company and is authorised and regulated by the Financial Conduct Authority with FRN:984288.

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  • In Belgium: This document is intended for professional clients. This content has not been validated by FSMA. The decision to invest in the promoted fund should take into account all its characteristics or objectives as described in its prospectus. This communication is published by Carmignac Gestion S.A., a portfolio management company approved by the Autorité des Marchés Financiers (AMF) in France, and its Luxembourg subsidiary Carmignac Gestion Luxembourg, S.A., an investment fund management company approved by the Commission de Surveillance du Secteur Financier (CSSF). “Carmignac” is a registered trademark. “Investing in your Interest” is a slogan associated with the Carmignac trademark. This document does not constitute advice on any investment or arbitrage of transferable securities or any other asset management or investment product or service. The information and opinions contained in this document do not take into account investors’ specific individual circumstances and must never be interpreted as legal, tax or investment advice. The information contained in this document may be partial and could be changed without notice. This document may not be reproduced in whole or in part without prior authorisation. The risks and fees are described in the KID (Key Information Document). The prospectus, KID, the net asset-values and the latest (semi-) annual management report may be obtained, free of charge, in French or in Dutch, from the management company (tel. +352 46 70 60 1) or by consulting its website or www.fundinfo.com. These materials may also be obtained from Caceis Belgium S.A., the financial service provider in Belgium, at the following address: avenue du port, 86c b320, B-1000 Brussels. The Fund (fonds commun de placement or FCP) is a common fund in contractual form conforming to the UCITS Directive under French law. Access to the Fund may be subject to restrictions regarding certain persons or countries. The Funds are not registered for retail distribution in Asia, in Japan, in North America, nor are they registered in South America. Carmignac Funds are registered in Singapore as restricted foreign scheme (for professional clients only). The Funds have not been registered under the US Securities Act of 1933. The Funds may not be offered or sold, directly or indirectly, for the benefit or on behalf of a «U.S. person», according to the definition of the US Regulation S and FATCA. In case of subscription to a fund subject to Article 19bis of the Belgian Income Tax Code (CIR92), the investor will have to pay, upon redemption of his or her shares, a withholding tax of 30% on the income (in the form of interest, or capital gains or losses) derived from the return on assets invested in debt claims. Distributions are subject to withholding tax of 30% without income distinction. In case of subscription in a French investment fund (fonds commun de placement or FCP), you must declare on tax form, each year, the share of the dividends (and interest, if applicable) received by the Fund. Any complaint may be referred to complaints@carmignac.com or CARMIGNAC GESTION - Compliance and Internal Controls - 24 place Vendôme Paris France or on the website www.ombudsfin.be.

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For Carmignac Portfolio Long-Short European Equities: Carmignac Gestion Luxembourg SA in its capacity as the Management Company for Carmignac Portfolio, has delegated the investment management of this Sub-Fund to White Creek Capital LLP (Registered in England and Wales with number OCC447169) from 2nd May 2024. White Creek Capital LLP is authorised and regulated by the Financial Conduct Authority with FRN : 998349.

Carmignac Private Evergreen refers to the Private Evergreen sub-fund of the SICAV Carmignac S.A. SICAV – PART II UCI, registered with the Luxembourg RCS under number B285278.