Performance Equity

Performance Equity, a specialized asset class conceived by SilverArrow Capital Group, refers to investments made into publicly traded and private equity capital applying a distinctive approach of selecting, financing and structuring a transaction. The main criteria for Performance Equity investments are:

  • Publicly traded and private companies with industry focus
  • Leading in its industry either as cost or technology leader
  • Global business scope and superior performance

The Performance Equity investor co-invests alongside the Performance Equity Sponsor in the acquisition of actual or effective control in public companies that meet distinctive investment criteria. A key feature is that Performance Equity capital is only subject to maximum one-year lockup and can be sold in the market at any time.

The Performance Equity approach applies an antagonistic as well as a cooperative investment approach and is mainly focused on playing an active role in the management of the company by installing its in-house experienced management team. The investor’s capital is invested directly in the target company and the investor is in direct control of the investment.

The financing structure for these deals are typically a mix of equity and relatively conservative financial leverage. The target companies are mature and generate operative cash flow, which the management needs to drive the performance and strategic measures. The Performance Equity team focuses on all aspects of quick operational improvements but especially on top-line market oriented measures in order to drive company’s development, which in return translates in higher market capitalization by the time of monetization. The typical project lifecycle aims to be less than 3 years.

Performance Equity minimizes risk by keeping the investor close to the investment and improvement cycle, giving a higher level of security then any classical asset classes in this field. Due to the nature of the investment the only downside risk is the movement of the target share price.

The returns seen Performance Equity investments are higher then the average return of any other private equity sub asset class.

Performance Equity Private Equity
  • Investment in selected public equity target
  • Performance equity team co-invests
  • Lock-up period < 1 year
  • Direct management of asset by internal operational team
  • Funds are investor controlled, owned and liquid
  • High average growth compared to all other equity investments
  • Project timeframe < 3 years
  • Investment in industry fund
  • No co-investment by general partner
  • Lock-up period between 3 to 7 years
  • No direct management control over invested target
  • Investor has no control over illiquid funds
  • Below average growth over the past 10 years (IRR 10%)
  • Project timeframe plus 6 years