AUMs
It stands for Assets Under Management, and it is used to define how many assets an investment fund or management company manages.
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Active management
It is a management strategy in which investment decisions are made by an investment team based on their experience, knowledge and information, with the aim of beating the market. It differs from passive management in that the latter seeks to replicate its benchmark index.
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Advisory service
According to the CNMV, the investment advisory service consists in providing personalised recommendations to customers, whether at their request or at the company's initiative, on one or more operations related to financial instruments
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Alternative investment
This type of investment invests in non-traditional assets and encompasses strategies such as private capital and other methodologies such as hedge funds.
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Appropriateness Test
When investing, the entity will only be able to offer the investor the products it considers appropriate.
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Business angel
Business angels are people who invest their money in the initial stage of emerging companies (startups) in exchange for an equity stake.
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CAGR
The Compound Annual Growth Rate consists in calculating the rate of return that would be required for an investment to grow from the beginning balance to its ending balance, assuming the profits are reinvested at the end of each period of the investment's life span.
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CIU Management Company
A Collective Investment Undertaking Management Company is a public limited company whose purpose is to administer, represent, manage investments and subscriptions and fund repayments.
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CNMV
The CNMV (National Securities Market Commission) is the body responsible for ensuring investor protection, as well as supervising and inspecting the Spanish stock markets and the activity of the actors involved.
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Capital call
Investors in private capital funds usually contribute capital as it is required.
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Carried Interest
This is the remuneration received by the management team of a private capital fund if it meets the condition of returning to the fund's investors their initial investment plus a previously established rate of return known as the hurdle rate.
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Carve Out
In a carve out process, a specific portion or business area of a company is separated to create an independent entity.
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Committed capital
This is the amount of money that the investor commits to investing in a private capital fund.
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Create and Grow Act
The purpose of the Create and Grow Act is to promote and facilitate the creation and expansion of companies, especially of SMEs.
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Crescenta
Hera, Athena and Nemesis, or in other words home, wisdom and balance. Another deity is added to this famous trio: Crescenta, the protector of private markets and economic growth.
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DPI
This metric is used in the field of private capital funds to evaluate the return on investments made in the fund. The DPI compares the cash distributions made to investors with the total capital committed by these investors to the fund.
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Decorrelation
This is the extent to which two or more variables or financial assets move independently of each other.
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Distribution
These are the gains that the investor receives once the divestment or harvesting period begins in a private capital fund.
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Diversification
This refers to the strategy of investing in a variety of financial assets or instruments, with the aim of reducing the risk of losses and increasing the potential for gains.
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Downside Protection
This technique is used in investing to mitigate or avoid a drop in value of an investment. Downside protection is a common goal of investors and fund managers to avoid losses, and several instruments or methods can be used to achieve this goal.
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Draw down
It is part of the committed capital invested in a private capital fund through capital calls.
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EBITDA
It is a financial indicator that assesses a company's earnings before interest, taxes, depreciation and amortisation.
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ELTIF
European Long-Term Investment Funds (ELTIF) are a type of fund that was created to facilitate long-term investment in the real economy.
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EV ratio
This stands for the Enterprise Value Ratio. It is employed to assess the operational and financial efficiency of a company.
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Equalisation premium
This is the amount that participants that enter a fund must pay after the initial closing.
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Equities
This is a traditional type of investment that invests in assets in which neither the return nor invested capital are guaranteed.
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Family Office
These companies were created to manage the wealth of families with large fortunes.
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Financial asset
It is a document or instrument issued by a company, a bank or an institution.
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Fintech
It is an acronym for finance and technology. Fintech companies use technology to offer financial products and services in an innovative and efficient way.
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Fixed income
It is a traditional type of investment that involves investing in debt issues of companies or public institutions.
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Flagship Fund
It is the main or most prominent fund of a management company. This term is given to the management company's largest funds in terms of assets under management (AUMs).
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Fund of funds
It is an investment vehicle that invests in other funds.
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Fundraising
This is the phase in which a private capital investment fund is set up and the required capital is obtained from interested investors.
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General Partner (GP)
This is the name given to a manager of a private capital investment fund, and their duty is to acquire capital from investors and seek, execute and manage investments, with the aim of obtaining returns for the fund's investors.
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Greenwashing
This practice involves presenting a company, product or activity as sustainable and socially responsible when it is not.
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HNWI
It stands for High Net Worth Individual.
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Hedge Funds
Private capital Hedge Funds (HF) are traded only with professional customers. Their main characteristic is that they have fewer diversification restrictions in their investment policy.
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Hurdle Rate
This refers to the percentage from which management companies of an investment fund charge a success fee. If it is below the stipulated rate or return, the management company does not receive a profit for the return level obtained.
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IRR
The Internal Rate of Return (IRR) measures the return of an investment over time.
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Inflation
This is the broad increase in the prices for goods and services over a period of time.
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Infrastructure
Infrastructure investment involves investing in a set of physical structures and essential services such as roads, bridges or airports.
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Invested capital
It is part of the committed capital effected through a capital call and invested in opportunities found by the private capital fund.
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Investment fund
It is an investment vehicle that is set up by gathering the money of several investors, called participants.
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J Curve
It represents the net asset value of a private capital fund.
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KYC and AML
This is a process of identity verification carried out by companies and organisations that offer financial services.
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Limited Partner (LP)
The investor contributes capital to the private capital fund, but does not have an influence on investment decisions. Investors can be institutions such as pension funds, foundations and insurance companies, as well as retail investors.
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Liquidity
It is the capacity of an asset to become money in a short space of time without experiencing a significant loss in value.
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Loss Ratio
It is used to describe the proportion of losses compared to the earnings. This metric provides information on the capacity of a portfolio, strategy or investor to manage and limit losses with respect to the gains.
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M&A Operations
This refers to the Merger and Acquisition activity (M&A). This type of strategy focuses on merging and acquiring companies with the aim of improving them and making them grow.
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MOIC
Multiple on Invested Capital is a ratio used to measure the performance of a private capital fund. Specifically, it measures the amount of times that the initial investment is contained in the final result of an investment.
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Management company
It is the entity responsible for administering and managing third-party funds on their behalf by following the previously established investment strategies.
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Management fee
This fee is associated with the annual operating costs involved in managing and administering a private capital fund.
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Megatrends
These are far-reaching trends that are transforming the way we live, work and interact worldwide.
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MiFID
The Markets in Financial Instruments Directive is a European regulation whose main objective is to reinforce the protection of retail investors, increase transparency in financial markets and promote competition among financial service providers in the European Union.
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Net asset value
It is the value of the net assets of a fund divided by the number of units.
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Opportunity cost
This is the cost of the alternative option we give up when we make a decision.
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Passive management
It is a management strategy in which investment decisions are not made by an investment team based on their experience, knowledge and information, but they are made with the aim of replicating the market. It differs from active management in that it seeks to perform better than its benchmark index.
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Portfolio
It is the set of assets (funds, stock, etc.) in which we are invested.
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Portfolio management
According to the CNMV, this is the investment service through which an entity adopts all decisions relating to the composition and administration of a securities portfolio, in accordance with the instructions of the holder thereof.
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Private Capital
Private capital investment involves investing in unlisted companies (private companies) seeking greater diversification and returns.
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Private Equity
It is a type of private capital investment that invests in private companies, i.e. those that are not listed, such as family or industrial companies, with the aim of boosting their financial performance and growth.
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Private Equity Buyouts
Dentro del Private Equity existen diferentes estrategias de inversión, buyouts es una de las más comunes. Hace referencia a la inversión en empresas con negocios ya probados. Los gestores (GP) entran en las compañías para instaurar mejoras operativas o crear sinergias para aumentar su valor.
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Private Equity Growth
Dentro del Private Equity existen diferentes estrategias de inversión, como growth. Esta estrategia consiste en invertir en empresas que ya están establecidas y tienen la oportunidad de seguir creciendo y expandiéndose. Generalmente, se financian planes de crecimiento a través de la internacionalización del negocio.
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Private capital funds
It is an investment vehicle that is set up by gathering the money of several investors that are called Limited Partners (LP).
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Private debt
This is a type of private capital investment that involves participating in the financing of private companies through debt.
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Private markets
It covers assets that are not public, i.e. that are not listed on the stock market.
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Professional investor
These investors can make their own investment decisions and assess the risks they assume thanks to their experience and training.
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Public markets
These are financial markets where investors can buy and sell securities issued by companies, governments or other organisations.
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RCF
It stands for Risk Capital Fund, equivalent to a private capital fund.
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Real economy
This is the part of the economy that deals with the production and exchange of real goods and services.
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Retail investor
The most simple way to define retailers is by exclusion, i.e. they are customers that do not fit in the professional category due to having less experience and/or knowledge.
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Return
This is the extent to which an investment generates gains or profits in relation to the investment.
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Round financing
This is the process through which a company obtains financing to perform its business.
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SDG
The Sustainable Development Goals (SDGs) are a universal call to action to end poverty, protect the planet and improve the lives and perspectives of everyone, everywhere.
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SaaS
A Software as a Service (SaaS) is a software distribution model in which the provider hosts the application on the cloud so users can access it via internet.
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Scaleup
It is a company that has proven a significant potential for growth and is in an intermediate stage between a startup and a consolidated company.
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Secondary fund
Investment in private markets (unlisted companies) is noted for its illiquidity. In order to manage this illiquidity, there are solutions that allow selling and buying units, usually at a discount.
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Secondary market
It is a market where financial assets that have already been issued are bought or sold. It provides private capital investors an opportunity for liquidity.
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Securities market
It is a physical or virtual space where financial instruments are traded.
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Startup
It is a recently established business that is usually noted for its high innovation, capacity for scalability and growth potential.
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Subscription
This is the process by which an investor invests in a fund and acquires units.
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Subscription fee
This is charged to investors when they make an initial investment or subscribe units of a fund.
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Success fee
It is a fee that is only charged if a fund exceeds the specific rate of return once it has been liquidated. It is charged over the total success achieved.
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Suitability test
The MiFID establishes that before contracting an investment product, the entity providing the services must assess the investor's knowledge and prior experience and analyse their investment objectives and financial situation.
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TER
The TER (Total Expense Ratio) is the total expense borne by a fund. It includes expenses such as management fees, distribution fees and other operating costs. It is expressed as a percentage and, usually, the lower the TER, the more efficient the investment for investors from a point of view of expenses.
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TVPI
It measures the overall performance of a private capital fund. It represents the ratio between the total actual value of the fund's investment portfolio and the total capital committed by investors to this fund.
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Top Quartile
It refers to 25% of the best funds in terms of profitability. The calculation is carried out considering a specific period of time.
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Top Tier
Top-tier management companies stand out for their track record of success and high returns, privileged access to investment opportunities, network of contacts and reputation in the industry.
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Track Record
This is the history of returns of a fund or management team.
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Trade
This is the activity carried out by entities that sell funds from different fund managers, in addition to those belonging to their financial group. At Crescenta we are a CIU management company that manages its own funds and trades funds from other management companies.
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Traditional investment
Traditional investment refers to the common practice of investing in traditional financial assets such as equities, fixed income, monetary assets, etc.
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Unicorn
These are companies that reach a valuation of $1 billion without being listed, i.e. while still in the private markets.
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Venture Capital
This type of private capital investment involves investing in mainly tech companies or companies with a strong innovative component that are in an early stage of development (startups).
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Vintage Year
This is the year of creation and the first capital requirement of a fund that invests in private capital.
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Volatility
This term refers to the measure in which the price of an asset varies, such as a share, bond or currency, over a period of time.
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