Lombard Odier IM is launching the Continental European Family Leaders fund, which will invest in European family owned companies in the small- and micro-cap space, Citywire Switzerland has learned.
Commenting on the launch, Dahmani said: ‘We felt that it could be an interesting opportunity to offer a product that can combine both the family owned aspect with the interesting growth profile of micro and small caps.’
He said the management team will make use of research into European small- and mid-cap stocks, as the strategy will be very similar to the Eurozone Small and Mid Cap fund.
It will focus on family-owned enterprises and aim to have a portfolio with 80% of holdings below the €2 billion market cap level. Any mid-cap positions would be for the purpose of liquidity, Dahmani said.
‘We like firms that have anchor shareholders because it means there are people that can counterbalance the management and have a long term vision as they have some skin in the game.
‘Families want to pass the business on to the next generation so they're not here for the next quarter or year, they are here for the next decade.
‘That doesn't mean those companies are always defensive, they are actually taking risk but in the areas they know very well.'
With less diversification, the firms are often able to become specialised leaders and tend to have a higher profitability than the rest of the market, Dahmani added.
Two family-owned funds that look attractive to the manager are Steico and Corticeira Amorim.
German energy saving insulating materials manufacturer, Steico is majoritarily owned by the founding family, which holds almost 70% of the capital.
The firm has a total market cap of 262 million and depending on valuation, is likely to be an holding within the new portfolio, Dahmani.
‘We like this company because it fits with the trend of saving energy in renovations or new buildings. Plus, this is made of ecological or at least naturally made materials, which is also growing.’
Another niche specialist is Portuguese stop cork manufacturer Corticeira Amorim, which has a market cap of €1.4 billion.
The fund will be launched with €31 million in seed capital.