Brederode: perfect match for our portfolio
Q3 2024
Short description
Brederode is the holding company of the Van der Mersch family, which owns 60.67% of the business, in addition to the 4.29% held as treasury shares by the company itself.
The roots of Brederode date back to 1804 with Charbonnage de Monceau-Fontaine, a coal mining company in the Charleroi region (Belgium). However, this may not be entirely accurate, as it is one of the companies they acquired in 1980 (the year I was born). The real origins can be traced to Compagnie Auxiliaire des Mines, or Auximines for short, which was established in Brussels in 1899 and specialized in mining lamps.
Access to Top Private Equity
Since 1977, the company has been under the leadership of its current shareholders, who have gradually phased out industrial and commercial activities in favor of investments. These range from minority stakes in publicly traded companies—where they remain hands-off—to an increasing focus on private equity.
The family and the company generally avoid media attention, and their annual reports are concise. But honestly, what more is there to say? We can directly access the information from the public companies they invest in. Their primary focus, however, is on private equity funds, where they rely on their expertise to select the right funds and managers.
In short, Brederode is not an easy investment to evaluate due to this limited information. Investors must rely primarily on their track record.
Brederode divides its investment portfolio into two parts: publicly traded equities, which make up 32.6% of the total portfolio, and private equity, accounting for 67.4%.
Public Equity Portfolio
The publicly traded portfolio invests in:
Technology (36.2%): Samsung, Mastercard, Alphabet, Intel, Microsoft, and Relx
Consumer Goods (17.7%): Unilever, Nestlé, and LVMH
Utilities (17.2%): Iberdrola, Enel
Treasury Shares (10.4%)
Healthcare (10.4%): Novartis and Sanofi
Miscellaneous (8.1%): RBC, Siemens
Private Equity Portfolio
The private equity portfolio consists mainly of investments in private equity funds managed by specialists like EQT, Ardian, Bain Capital, HIG Capital, The Carlyle Group, BC Partners, and others.
The focus here is primarily on buyouts and growth investments—later stages in the business lifecycle—rather than riskier start-ups.
Why we selected Brederode
The track record of the Van der Mersch family is exceptionally strong, with an annual growth rate of 14.4% over the past ten years (including dividends).
Determining the net asset value (NAV) of Brederode is relatively straightforward for them. Publicly traded companies are valued at their market prices on the reporting date, while private equity funds provide their own valuations. However, this means the NAV will never fully reflect the true underlying value, but is it cheap enough today to buy more?