Management Board

“The best of two worlds”

Peak performance is always achieved within a team. This is also reflected in the complementary abilities of the members of the Altira Group Management Board consisting of Michael Rieder, David ZImmer, Peter Brumm, Andreas Lange and Christian Angermayer. All five are united by entrepreneurial drive and the joy of success. The following interview took place in March 2008 and provides insight into the strategy followed by the Altira Group and how this strategy sets the Group apart from its competitors. It also describes the Group’s philosophy of entrepreneurial asset management and its focus on inefficient markets.

Mr. Brumm, what inspires you most in your position on the management board?

Peter Brumm: I am inspired every day by the opportunity to continue developing a modern asset management group as an entrepreneur. We have come a long way, but are still at the starting stage of our development.

Christian Angermayer: I am especially pleased with what we have been able to achieve and can still achieve with our complementary task sharing: Whereas I am particularly responsible for detecting new investment trends and designing new products, Andreas, in his function as CIO, is responsible for setting up and expanding the investment team as well as developing investment strategies. Peter is the ideal risk manager and sparring partner for the teams. Michael is the perfect CEO, representing the organisation to the outside world and internally providing cohesion and the drive to achieve peak performance.

Mr. Rieder, you have many years of experience in the financial industry and have worked for highly regarded investment companies. What do you personally believe sets Altira apart from its competition?

Michael Rieder: I firmly believe that independently operating, specialised investment boutiques can generate a sustainable above-average risk/yield profile. We try to win over the top investment specialists in their respective sectors, give them comprehensive decision-making autonomy and motivate them via incentive compensation that is highly performance-based. We not only offer our investors the performance strength of our subsidiary boutiques, but also Altira Group’s solid, mature infrastructure that handles the central functions of the product management, distribution and distribution support, risk management, controlling, IT and legal areas, ensuring maximum service, transparency and stability.

But aren’t concentration and focus precisely the strengths of boutiques? Why did you choose such broad diversification?

Michael Rieder: The Altira Group has a very clear focus, namely on inefficient markets. Our institutional infrastructure enables the investment teams in their respective investment classes to fully concentrate on their primary task – namely the sustained generation of an above-average risk/yield profile. The Altira infrastructure takes care of the framework. Last but not least, the diversification of our holdings across a variety of investment classes allows a broad transfer of know-how between the individual teams. This know-how transfer often makes it possible for us to achieve precisely the outperformance that sets us apart from our competition.

Peter Brumm: I would like to rephrase Michael Rieder’s statement: Quite often there are two hearts beating in the chests of investors: On the one hand, they know a consistent outperformance can rather be obtained from a smaller boutique than a large institution, yet on the other hand they prefer a solid, well-known company and do not want any surprises. With our platform approach, we can satisfy both requirements in a singular manner. Every one of our teams works on investment decisions like a small, independent boutique. However, with equity capital of more than EUR 50 million, more than 100 employees in 13 locations and an institutionalised organisational structure also attributable to the stock exchange listing, the Altira Group is now one of the larger participants in the market.

What does the interdisciplinary cooperation you mentioned look like?

Andreas Lange: Let me give you a concrete example: We manage one of the most successful private equity fund of funds in Europe that selects and evaluates the best private equity teams and then invests in them. This has allowed us to cultivate personal access to legendary investment experts, which has greatly aided us in developing our own investment style and requirements profile. We have all learned a great deal and are continuously learning more. That is truly “teaming up with the best”.

Christian Angermayer: Our new Africa fund is also a good example of the interdisciplinary cooperation: We recognised immediately that real estate development is one of the most promising asset classes in the booming economies of Africa. It was therefore obvious we should combine the market access of our local Africa team with the years-long experience of our real estate management company R-Quadrat in the also emerging markets of Eastern Europe.

In your investment philosophy, you speak of inefficient markets. Where does this focus come from?

Michael Rieder: The more efficient a market is, the more difficult it is to methodically achieve outperformance. And this is precisely what investors expect when they entrust their capital to a boutique. Many of the segments that our investment teams invest in are inefficient per se, such as private equity or real estate, since there are no liquid, standardised, regulated markets in these segments. In the public equity area, we therefore concentrate on niche and promising markets in order to create added value over the medium to long term.

To date, you have quite well managed to be one of the first to recognise new trends, such as climate change and Africa, and to quickly issue relevant investable products. What are you doing to ensure you continue to have an edge?

Christian Angermayer: Our investment ideas result from a broad personal network that spans the globe. We have ongoing discussions with interesting people regarding their opinion on particular topics, or the future in general. Over the years, we have cultivated an intuition about the development of real, long-term megatrends and when it pays for us to invest more time on research. Lastly, one of the most important entrepreneurial abilities is the ability to recognise change and to comprehend it as an opportunity.

A number of your private markets & real estate funds are structured as exchange-listed investment companies. Why?

Michael Rieder: Liquidity is an important property for most investors. However, private equity and real estate strategies are of a particularly long-term nature, as they in turn invest in assets which are not liquid. Exchange-listed investment trusts are one possible solution. In addition to managing traditional partnership structures, several of our investment teams therefore also manage listed investment companies, which make it possible for investors to buy and sell quickly.

The Altira Group itself is also exchange listed. Do you focus more on your shareholders or your investors?

Peter Brumm: Both equally, as both essentially have the same expectations from us, namely the above-average performance of our funds. Investors, as they are only prepared to pay management fees for outperformance. Shareholders, as our fee structure has a strong emphasis on performance-related fees. The Altira Group therefore only earns a good return when investors do.

Michael Rieder: For our investors, the listing has two decisive advantages: transparency and continuity. Although we are owner-managed, together with the supervisory board, we have already developed structures enabling the Company to continue its success, for example, even if something happens to a key person.

You mention that there is a special corporate culture at the Altira Group. How would you describe your relationship with your colleagues?

Christian Angermayer: I have a long-term friendship with and deep confidence in my founding partners Peter Brumm and Andreas Lange. Everything that the Altira Group is today, we built up together. Michael Rieder is an ideal addition to our team, just as all of our colleagues are integral parts of our big family. I believe that I can speak for all of us when I say that we only want to work with people we like and admire. That is one of the most important privileges of an independent entrepreneur.

One of Altira Group’s guiding principles is “Teaming up with the best” What would motivate a high-potential individual to work for your young company, when he could just as easily start with one of the major companies in the sector?

Peter Brumm: All of us have worked for renowned international asset managers and investment banks and therefore know them from the inside. Without a doubt: You can certainly gather useful experience, make important contacts, and learn a great deal at these companies. Nevertheless, I am convinced the Altira Group can particularly attract people who like to work independently and who want to be one of the best in a specialised area. Altira Group offers more than every large company, namely broad decision-making and creative freedoms as well as highly performance-oriented remuneration models. We refer to it as “entrepreneurial asset management”. To a certain extent, it is expected of every one of our employees that they think and act like an entrepreneur: to be proactive, motivated, creative, and have strong decision-making abilities, while at the same time always remaining aware of their responsibilities and carefully weighing all options. I think that makes us rather unique in Germany.

Andreas Lange: Like the investors, our investment managers also have the best of two worlds: In making investment decisions, they have the same independence they would have with their own boutique and the remuneration structures are also entrepreneurial and performance-oriented. As the Altira Group provides support for non-core areas such as marketing, distribution, IT and risk management, the managers can fully concentrate on their funds.

As the old saying goes “Trust is good, control is better”. How does risk controlling take place?

Peter Brumm: In addition to Andreas Lange, who as CIO functions rather as a mentor to the teams performing an important controlling function, I am responsible for, along with my ten-person team, the finance, legal and risk management areas. We want to have a constructive dialogue between the respective experts on the one side –who naturally have greater expertise with the details – and my complementary team on the other side, which questions and argues more from a “big picture” point of view. These discussions are seen by both sides to be very beneficial. Within the risk management framework, questions are also asked on an ongoing basis with respect to the composition of a fund’s overall portfolio and its balance sheet policy. We also participate in all structural decisions, such as the legal structure of the company. Lastly, we have to think about preventative measures, for example, the unpleasant but unfortunately quite possible challenges to be faced resulting from a key man event such as an accident, and the management of the respective fund.

Michael Rieder: Particularly worthy of note, is also the willingness at all levels to learn from mistakes and to continue to develop further. Even with careful planning and prudent risk management, unforeseen difficulties can arise, particularly in new markets that require new solutions. Often the best guarantee for a value-added solution is open communication where criticism is accepted, entrepreneurial thinking, and years-long experience – particularly in relation to mistakes and failures. The nearly ten years of entrepreneurial experience gained by management in building up one of the largest independent financial services groups in Germany is therefore one of the significant value drivers of our funds.

Mr. Lange, the private equity sector has been subject to strong public criticism in the last few years. What is your reaction to the well-known “plague of locusts” accusations?

Andreas Lange: Most of the criticism of these “locust” opponents is oversimplified and directed towards a small number of extremely aggressive buyout firms or hedge funds. I can understand the criticisms as far as it relates to financial engineering methods, which in practice are used too excessively at times. However, studies, and in particular also my own experience, show on average that private equity managed companies have better decision-making structures and are therefore frequently more successful. Everyone benefits from this, the employees, shareholders and the general public. There are presently more than 4,000 employees working at the companies financed by Heliad, our private equity fund in Germany. In this way, we are able to make our own personal contribution to the economic security of Germany.

In your business philosophy, you acknowledge that you have social responsibility. Could you give us some concrete examples?

Christian Angermayer: We feel that entrepreneurship as an overarching institution crossing state boundaries and built on the principles of freedom and democracy is of crucial importance in a time of both global opportunities as well as global challenges, in particular poverty and climate change. Entrepreneurship is efficient, quick and above all global, making it the most important weapon in the fight against global problems.

In addition to generating profits for our investors, we are therefore especially proud that many of our funds also provide a valuable contribution to society. A good example is ecolutions, our climate-protection private equity fund. The fund’s investments in CO2 reduction projects worldwide make an important contribution in the fight against climate change. Another example is African Development Corporation, our investment trust focused on Africa. With this company, we finance aspiring companies in Africa and make a contribution to development that could never be provided by development assistance organisations. This is because the need of Africa’s young economies to be respected and integrated into the global economy as an equal partner is greater than the need for donations.

Lastly, a question pertaining to your objectives: Where will the Altira Group be in five years?

Michael Rieder: I would first like to reply by taking a look at the past and our track record: In 2000, Altira Group had EUR 15 million under management; today it is more than EUR 1.1 billion. From the beginning of 2006 to the end of 2007 – meaning in only two years – our assets grew from EUR 0.4 billion to EUR 1.1 billion. In 2000, Bayreuth was our only location. Today we have 13 locations around the world. An outstanding success story which we intend to continue over the coming years. It is our objective to continue to acquire and keep satisfied customers through products with above-average success and open communication. In three to five years, we will then be one of the largest independent German asset managers.

Thank you for the interview.

Michael Rieder,
Chief Executive Officer,
Sales & Sales Controlling, Marketing, Public Relations

David Zimmer,
Chief Financial Officer,
Finance, Legal, Human Resources, Risk Management

Peter Brumm,
Business Development

Andreas Lange,
Chief Investment Officer

Christian Angermayer,
Business Development & Investor Relations