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Brederode: Europe's Quiet Private Equity Compounding Machine
I. Introduction & Episode Roadmap
Picture this: You're a retail investor in Brussels, sipping espresso at a café near the Grand-Place, scrolling through your brokerage app. You've heard the whispers about private equity—how the world's wealthiest institutions have been piling into Carlyle, Bain Capital, and EQT, earning returns that leave public markets in the dust. But there's a problem. Those funds require minimum commitments of €10 million, ten-year lockups, and the patience to endure capital calls that arrive at the worst possible moments. For ordinary investors, the velvet rope around institutional private equity might as well be electrified.
And yet, hidden in plain sight on Euronext Brussels, there's a ticker symbol that offers a backdoor into this exclusive world: BREB.BR.
Today, Brederode is one of those rare companies specializing in Private Equity, listed on the stock market and self-managed in the interest of its shareholders. It benefits from a stable majority share ownership from which its top executives emanate, allowing these individuals to work confidently with a long-term perspective, without fear of being influenced by disruptive external factors guided by short-term considerations. The company operates with an overall level of management costs that is below market level and an uncompromising governance structure.
At the end of 2024, Brederode's financial assets amounted, in net book value, to €4,216 million, broken down by type of shares as follows: private equity funds (68.2%), with the portfolio by invested amounts broken down geographically between Europe (29.8%), the United States (66.4%), and Asia/Pacific (3.8%); and shares in listed companies (31.8%). The portfolio's net book value is broken down by business sector between technology (27.3%), financial services (19.4%), electricity (16.1%), consumer goods (15.5%), healthcare (8.5%), and other (13.2%).
This €4+ billion portfolio is managed by just 7 employees—an almost absurdly lean operation that would make any Silicon Valley startup jealous.
But here's the truly remarkable part: Founded in 1804, Brederode is an investment firm based in Luxembourg, managing a diversified portfolio that includes both listed and private equity investments. That founding date predates the Battle of Waterloo. It predates Belgium's independence. It predates the very concept of "private equity" by nearly two centuries.
The core tension at the heart of Brederode's story is simple but profound: How did a colonial-era coal mining company, forged in the smoky industrial heartland of Belgium during Napoleon's reign, transform itself into a sophisticated private equity fund-of-funds that now allocates capital alongside the likes of Bain Capital, EQT, and The Carlyle Group?
This article explores that journey across three pivotal inflection points: the 1977 strategic pivot that redirected the company from industrial operations to pure capital allocation; the 1992 launch of private equity operations that positioned Brederode early in the institutional PE wave; and the modern era of portfolio construction that has delivered remarkable returns while flying almost entirely under the radar of mainstream financial media.
II. The Deep Roots: Colonial Belgium & Industrial Origins (1804–1970)
In October 1804, while Napoleon Bonaparte was consolidating his grip on continental Europe, a nobleman named Charles-Alexandre de Gavre stood in the rolling hills of what is now southern Belgium, near the town of Charleroi. The former lord of Monceau was about to do something that would echo through two centuries of corporate history.
Charles-Alexandre de Gavre, the former lord of Monceau, founded the "Société de Monceau-Fontaine" with 5 associates. The venture was focused on coal mining—"black gold" as it was known in an era when steam engines were just beginning to transform European industry.
The Société de Monceau-Fontaine would eventually exploit several deep mine shafts exceeding 1,000 meters, including the no. 19 shaft, which figured among the deepest in Europe. What began as a speculative venture in a Napoleonic-era mining concession would grow into one of Belgium's most significant industrial enterprises, producing over 1.75 million tons of coal annually at its peak in 1957 and employing more than ten thousand workers.
For more than a century this company was "the pearl in its crown" and no opportunity was missed to buy adjacent competitors or to enter into mergers, thereby constantly expanding the scale of the concession. As from the end of the 19th century Monceau-Fontaine was the primary coal producer of the country. In its peak year of 1957, 1,752,000 tons of coal was produced and the company employed over ten thousand people. Then came the downfall: mines became depleted, the international competition was strong and social unrest imminent. The government gave Monceau-Fontaine over 9 billion Francs in subsidies between 1966 and 1980 to enable the gradual closure of mines.
But the Brederode story isn't just about Belgian coal. It's interwoven with one of history's most controversial chapters: the Belgian colonial enterprise in Central Africa.
Belgo-Katanga was established in 1910, two years following the hand-over by King Leopold II of the vast territory of Congo Free State—until then his private property—to the Kingdom of Belgium. Following the completion of the rail link from Capetown to Elisabethville (nowadays Lubumbashi), the newly founded capital of the mining province of Katanga, three of the pioneers who had earned success working in the holding owned by general Albert Thys, a businessman and the king's financer at the time of Congo Free State, decided to establish Belgo-Katanga. They came from three different countries: France, Belgium, and Luxembourg.
The founding of Belgo-Katanga represented a different kind of colonial venture—In 1924, the "factoreries" belonging to Belgo-Katanga were closed or sold since they were no longer profitable and the company became a sort of investment trust or holding primarily managed by bankers and stockbrokers with less activities of its own. It paid a heavy price during the great depression from 1929-1935 and the dramatic decrease in value of the so-called colonial values in the ten years following the independence of the colony in 1960.
The third major tributary feeding into modern Brederode was an even more direct connection to Congo's colonial economy. Cotoni was the recently modified name of the Société Cotonnière Congolaise or "Cotonco," a company established at the initiative of the colonial administration in 1920 and which enjoyed the particular support of King Albert I. The Belgian State was in fact the first pioneer to introduce the "white gold" to the colony. When Cotonco was established the State became its main shareholder by way of compensation for the contribution in kind such as the threshing factories ordered in the United States.
The independence of the Belgian and French colonies in 1960 and the revolution in Angola in 1975 caused a fundamental change. Following the nationalization of the cotton industry, only the Republic of Chad paid the former foreign shareholders swiftly and correctly. Nevertheless, the losses Cotonco incurred in other countries were immense. During the decade following Congolese independence, Cotonco, now Cotoni, embarked on a large-scale reorganization which primarily led to new losses. The disappointed and unhappy shareholders were keen on selling their shares.
The cornerstone of modern Brederode was laid in 1970, when a different kind of opportunity emerged. The cornerstone of the future Brederode was laid in 1970 when the shareholder structure of the Compagnie Auxiliaire des Mines, in short Auximines, changed. The company was established in Brussels in 1899 and was named "L'Accumulateur Sec" and took a new name after the first World War.
The Brederode story began in 1970, when Van der Mersch, with the help of friends and family, bought Auxiliaire des Mines, an old listed coal mining holding. "That was our first financial tool that provided us with leverage," says Van der Mersch. "Brederode grew by constantly increasing the leverage."
The Investor's Lens: This colonial and industrial heritage matters for understanding Brederode today. The DNA of patient capital, long holding periods, and the acceptance of illiquidity—all essential traits for successful private equity investing—was forged over more than a century of managing mineral concessions, plantations, and industrial operations that couldn't be easily liquidated. When the pivot to pure investment came, the culture was already primed for the long game.
III. The 1977 Pivot: From Industrial Operator to Investment Company
The year 1977 marked the most consequential strategic shift in Brederode's two-century history. It was the moment when a collection of fading industrial assets was reborn as a capital allocation vehicle—a metamorphosis as dramatic as any in European corporate history.
After a long history dating back to 1804, the company underwent a radical change in strategy in 1977, spearheaded by new reference shareholders. A different vision entailed a gradual withdrawal from direct industrial and commercial activities in favour of proprietary investments, mainly as minority shareholder, with no involvement in the management. Since then, Brederode's ambition has been regular growth of its shareholders' assets through the recurring generation of not only dividends but also capital gains.
The architect of this transformation was Pierre Van der Mersch, a man who would eventually earn the nickname "the Belgian Warren Buffett." Pierre van der Mersch, dubbed the Belgian Warren Buffett, controls investment company Brederode. He began his career as a bank clerk in 1958, and in the 1980s began building his fortune by taking control of a series of publicly-traded shell companies. His asset management style focuses on taking long positions in undervalued companies.
But Van der Mersch is more than a copy of Warren Buffett. Van der Mersch is the result of the egoistic insufficiency of the classic big banks as they positioned themselves in the second half of the last century. With various large stock market operations, those banks worked out lucrative constructions where only they themselves benefited financially. Small investors were left out in the cold. Van der Mersch countered that system, set aside all his respect for the big banks and went his own way. Rightly so, as it quickly turned out. His listed investment holding Brederode made him a billionaire.
The strategic logic behind the 1977 pivot was elegant in its simplicity. Operating businesses—coal mines, plantations, manufacturing—required operational expertise, labor management, heavy capital expenditure, and constant attention to competitive dynamics. Pure capital allocation, by contrast, required only the wisdom to identify good investments and the discipline to hold them.
The three units were merged and Monceau-Zolder became the group's main investment company. As from 1978 Brederode decided to take advantage of the globalization of the economy and the free flow of capital and decided to establish a subsidiary in Luxembourg called Geyser. This new company grew organically and became in turn the group's main subsidiary.
The cleaning up of legacy assets was methodical but sometimes painful. Amongst around sixty strategic participations—often minority participations—Cotoni held at the end of 1976 shares amounting to around 20% of the share capital of a small, former colonial company called Afrifina, listed on the Brussels stock exchange but little known by the general public. This company was established in 1929 under the name Bamboli Cultuur Maatschappij, and its main shareholders had planned to establish hevea—the rubber tree—plantations in the eastern province of the colony. Bamboli also lost everything in Africa following the events of 1960. Surprisingly, it succeeded in an industrial reorganization and established a subsidiary called Artilat, specializing in foam rubber items.
In the meantime, Afrifina merged with Brederode in 2003. We now need to go back further in time to explain Brederode's largest acquisition, being the acquisition of Charbonnages de Monceau-Fontaine in 1980. This concerns a company with roots dating back to 1804.
Van der Mersch does not want to co-manage the companies in which he invests. He doesn't even want a seat on the board of directors. "Brederode is a long-term investor, but we always want to be free to leave," he once said at a shareholder meeting.
This philosophy—passive ownership combined with active portfolio management—would become the defining characteristic of Brederode's investment approach. It was a fundamental departure from the hands-on, operationally-focused mindset that characterized most Belgian holding companies of the era.
The daily management of Brederode was handed over in 2006 to his son Axel and his son-in-law Luigi Santambrogio. Notably, in recent fall Brederode announced that Axel also stepped back "to have more time for family." Santambrogio became the sole CEO.
The Playbook Parallel: This transformation bears striking resemblance to Berkshire Hathaway's evolution from a struggling New England textile mill to a diversified investment conglomerate. In both cases, a patient capital allocator recognized that the original business was declining and that the corporate structure itself—a publicly-traded vehicle with access to permanent capital—was more valuable than the underlying operations. The key difference: Brederode would eventually push this model even further, becoming primarily a fund-of-funds rather than a direct investor.
IV. The Private Equity Transformation (1992–2010s)
The second critical inflection point in Brederode's modern history came in 1992, when the company made its first commitments to private equity funds. This positioned Brederode remarkably early in what would become the institutional PE wave—well before private equity emerged as a distinct asset class in most European investors' minds.
Brederode's Private Equity operations date back to 1992.
Geyser was the catalyst for the international expansion which accelerated when this subsidiary obtained more financial means enabling it to establish the Luxembourg company Brederode International specializing in Private Equity. Brederode International joined forces with the British company Athanor Limited which was founded in London in 1994 for the purpose of insurance activities on the Lloyd's market at the time it opened up for the first time in its more than three hundred year old history to capital providers with limited liability.
This partnership with Athanor is an underappreciated element of Brederode's evolution. The Lloyd's connection gave Brederode a foothold in London's financial community—critical for accessing the Anglo-American private equity ecosystem that was rapidly maturing in the 1990s. The arrival of Athanor and Brederode's new notoriety in the London financial sector offered the opportunity to leave its mark on the enormous market characterized by a thorough reorganization. To this end the company appealed to its subsidiary Biocare.
For more than thirty years, Brederode has gradually focused on its Private Equity portfolio which has become the core of its business. The attraction of Private Equity is linked to the opportunity of earning a higher level of return than that expected on the stock market.
Understanding why Brederode chose the fund-of-funds approach rather than direct investing requires appreciating both the opportunity and the constraints they faced. As a relatively small institutional investor by global standards, Brederode couldn't compete with the likes of CalPERS or Harvard's endowment for direct deal flow. But by establishing relationships with top-tier general partners and committing consistently over multiple fund cycles, Brederode could earn access to managers who might otherwise ignore a €200 million commitment.
Brederode's Private Equity portfolio consists mainly of commitments in fixed-term (10-12 year) associations usually referred to as Limited Partnerships, or simply Funds. The managers of these funds invest the called amounts in various projects which they then manage until such time as they resell (exit) them, which is typically after a period of 4 to 7 years. The Brederode group chooses to participate in Funds that generally pursue a buyout strategy, in other words buying, through appropriate financial leverage (leveraged buyout), an interest—in principle, a controlling interest—in already mature businesses that have predictable cash flow.
Brederode also analyses all opportunities for direct co-investment in certain projects identified as promising, in parallel with certain Funds.
The strategic rationale for PE exposure was explicit and compelling: The interests of each of the parties involved are optimally aligned thanks to incentives put in place aimed at encouraging both the General Partners and the management of the acquired companies to maximize the return on investment for the shareholders over a period of generally four to seven years. Since the companies remain private or become private further to their acquisition, their management teams are in a position to take strategic initiatives that may generate a temporary reduction in profitability, with a view to significantly improving the company's valuation at the time of its sale. Such actions would be difficult to take for a public company as they could be interpreted as "profit warnings."
The speed of reactions of companies subject to the discipline of Private Equity is a significant competitive advantage. Because of the clear incentives based on tangible performance (IRR), PE firms are able to attract the best talent for both their own business and for the portfolio companies they acquire, for the ultimate benefit of their investors.
By the mid-2010s, the transformation was essentially complete. What had once been a colonial-era industrial conglomerate was now primarily a private equity access vehicle, with the listed securities portfolio serving a supporting role as a liquidity buffer for capital calls.
V. The Modern Brederode: Portfolio Deep Dive (2015–Present)
A. Current Portfolio Composition
At the end of 2024, financial assets amounted, in net book value, to €4,216 million, broken down by type of shares as follows: private equity funds (68.2%). The portfolio by invested amounts breaks down by country between Europe (29.8%), the United States (66.4%), and Asia/Pacific (3.8%); shares in listed companies (31.8%). The portfolio's net book value is broken down by business sector between technology (27.3%), financial services (19.4%), electricity (16.1%), consumer goods (15.5%), healthcare (8.5%), and other (13.2%).
The geographic concentration in the United States—two-thirds of the portfolio—is a deliberate strategic choice reflecting the depth and sophistication of American private equity markets. The United States comprises nearly half of Brederode's uncalled commitments and current investments.
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 top 25 General Partners included in this list represent 76% of total commitments. This concentration in proven managers reflects Brederode's philosophy of relationship investing—committing to successive fund vintages from managers who have demonstrated consistent performance.
Looking at the specific GP relationships as of mid-2025: The largest positions include Carlyle/Alpinvest (€240.63 million total including current investments and uncalled commitments), EQT (€223.10 million), HIG (€191.63 million), Ardian (€184.79 million), Arlington (€165.39 million), L-Catterton (€160.85 million), PSG (€147.85 million), Bain (€132.51 million), Genstar (€126.92 million), and Vista (€125.44 million).
This is a who's who of global private equity: Carlyle and Bain represent the mega-buyout space; EQT brings Nordic expertise with increasingly global reach; HIG specializes in middle-market complexity; L-Catterton dominates consumer-focused investing; Vista is the preeminent software buyout firm.
B. The Dual-Portfolio Strategy
One of Brederode's most elegant structural innovations is its dual-portfolio approach—using listed securities not merely as a separate allocation but as a deliberate liquidity reserve for PE capital calls.
Brederode's portfolio consists of two distinct and complementary operational sectors: non-listed, or Private Equity, holdings, and listed securities. The unique combination of these two portfolios allows optimal management of the liquidity risks linked to the uncalled Private Equity commitments while remaining fully invested overall.
In addition to its own return, the portfolio of listed securities is also considered an ultimate financing reserve maintained in support of Private Equity. It continues to be rigorously managed in order to balance its defensive nature with the profitability, liquidity and growth objectives.
The listed securities portfolio focuses on around twenty high quality companies. It is rigorously managed in order to balance its defensive nature with the profitability, liquidity and growth objectives.
The listed portfolio has evolved strategically. This portfolio's performance was influenced by its structural exposure to European securities, which saw more modest growth compared to the US markets. During the year, Brederode strategically adjusted its holdings, initiating positions in Microsoft, Siemens and Experian, increasing its stakes in LVMH and Alphabet (C), and reducing or exiting positions in companies such as Samsung, Nestlé, Sanofi, and Unilever.
C. Recent Financial Performance
The trajectory from 2022's loss to 2024's strong profits illustrates both the volatility inherent in PE investing and Brederode's resilience.
Brederode's net income for the 2023 financial year was €233.65 million, compared to the net loss of €73.30 million in 2022. The listed securities portfolio, which made a profit of €182.12 million (versus €-214.60 million for the previous financial year), fully played its role in complementing the Private Equity portfolio, whose net profit of €58.81 million (€141.85 million for the previous financial year) was more moderate, having been unfavourably influenced by the weakening of the Dollar compared to the Euro in the final quarter.
In 2024, Brederode's revenue was €376.73 million, an increase of 83.65% compared to the previous year's €205.14 million. Earnings were €413.26 million, an increase of 76.87%.
The board of directors proposed a shareholder distribution of €1.37 per share for the 2024 financial year. If approved, this would represent a 6.2% increase and mark the 22nd consecutive annual increase in shareholder remuneration. Brederode's net financial debt decreased to €69.91 million from €129.01 million in 2023.
The internal rate of return (IRR) of the PE portfolio over the past ten years stood at 16.6% in 2024, a level that deteriorated from 19.0% in 2023. The portfolio activity included €319.72 million in investments and €409.57 million in disposals, with a positive change in fair value of €326.77 million. The firm's largest investments and uncalled commitments are with Carlyle/Alpinvest and EQT.
The 22 consecutive dividend increases—a streak stretching back to the early 2000s—represents an unusual commitment for a PE-focused vehicle. Most PE investments are illiquid and lumpy; maintaining a consistently growing dividend requires careful cash flow management and the liquidity buffer that the listed portfolio provides.
VI. What Makes Brederode Unique: Structure & Governance
A. Self-Managed, Owner-Operated
Today, Brederode is one of those rare companies specializing in Private Equity, listed on the stock market and self-managed in the interest of its shareholders. It also benefits from a stable majority share ownership from which its top executives emanate. This allows these individuals to work confidently with a long-term perspective, without fear of being influenced by disruptive external factors guided by short-term considerations. Lastly, Brederode has an overall level of management costs that is below market level and an uncompromising governance structure.
The self-managed structure is crucial. Unlike most PE access vehicles—whether closed-end funds or fund-of-funds—Brederode doesn't pay external management fees to third-party advisors. The management is directly employed by the company and compensated through salary rather than the typical 2-and-20 structure that characterizes most PE fee arrangements.
This includes all the general expenses specific to Brederode and its subsidiaries for a total of €1.82 million in the first half of 2024 (€1.60 million for the first half of 2023), that is, an annualized 0.08% of the portfolio value.
Let that sink in: 0.08% of portfolio value for all general expenses. Compare that to a typical fund-of-funds charging 0.5-1.0% annually plus performance fees, layered on top of the underlying PE funds' own 2-and-20 structures. Brederode's cost advantage compounds dramatically over time.
Brederode has 7 total employees. Seven people managing a €4+ billion portfolio. That's roughly €600 million per employee—a ratio that would make any asset manager envious.
B. Majority Shareholder Alignment
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.
With influential leaders such as Pierre Van der Mersch, and a fortune estimated at over 1.9 billion euros, the family continues to strengthen its position in financial and cultural markets in Belgium and Europe. Pierre Van der Mersch, often compared to Warren Buffett, has built an impressive holding company called Brederode which currently manages an investment portfolio of over 3 billion euros.
The family control creates powerful alignment with minority shareholders. When the Van der Mersch family has 60%+ of their wealth tied up in Brederode's performance, there's little risk of management pursuing strategies that benefit insiders at shareholders' expense.
Bruno Colmant was called by the founder to take the Presidency of the Brederode Group in 2023 in Luxembourg. He handed over the chairmanship of Brederode to the economist Bruno Colmant in 2023.
The current board includes Bruno Colmant as Chairman, Axel van der Mersch as Director, and Pierre van der Mersch as Honorary President (from 9 May 2024, after serving as Executive Vice-President from 1 January to 8 May 2024). Executive Directors are Luigi Santambrogio (Managing director) and Nicolas-Louis Pinon (Director, CFO).
C. The PE Advantage Explained
Brederode's website articulates a sophisticated understanding of why private equity generates excess returns—and it's not just financial engineering.
The board of a PE-backed company, generally controlled by representatives of the General Partner, is focused on a number of KPIs, Key Performance Indicators. Such KPIs tend to zero in on cash metrics, on the progress of operational improvements, on the speed of execution of the business plan etc., and allow to spot and correct underperformance in the business very quickly. This focus provides significant downside protection to investors and gives comfort to the company lenders.
Since the companies remain private or become private further to their acquisition, their management teams are in a position to take strategic initiatives that may generate a temporary reduction in profitability, with a view to significantly improving the company's valuation at the time of its sale. Such actions would be difficult to take for a public company as they could be interpreted as "profit warnings" and not as positive actions aimed at improving the performance of the company over the long term. Companies backed by PE firms are able to fine tune their capital structure with an appropriate amount of leverage that optimally fits the business plan for the investment period.
VII. Playbook: Business & Investing Lessons
1. The Power of Strategic Pivots
The 1977 decision to exit industrial operations and focus purely on capital allocation represents one of the most successful strategic pivots in European corporate history. The lesson: when the core business is in structural decline, the corporate shell itself—with its stock exchange listing, established shareholder base, and access to permanent capital—may be the most valuable asset. The Brederode team recognized this reality decades before "corporate transformation" became a management consulting cliché.
2. Patient Capital Wins
220 years of compounding with a genuine long-term view. Brederode commits to 10-12 year fund cycles, holds underlying investments for 4-7 years, and maintains a listed portfolio designed for decades of ownership. This patient capital mindset—increasingly rare in an era of quarterly earnings obsession—creates genuine competitive advantage. GPs want LPs who won't panic during downturns and who will re-commit to subsequent funds.
3. Access Democratization
For retail investors, Brederode offers something genuinely rare: liquid access to institutional PE returns through a simple stock ticker. No capital calls, no lockups, no $10 million minimums. Just buy BREB.BR on Euronext Brussels and you're effectively invested alongside Carlyle, Bain, and EQT. This democratization of access—while imperfect due to NAV discounts and the intermediation layer—represents meaningful value for investors who would otherwise be locked out of PE entirely.
4. Lean Operations
Seven employees managing €4+ billion demonstrates the power of the fund-of-funds model combined with ruthless cost discipline. Brederode outsources the intensive work of sourcing, diligencing, and managing portfolio companies to the underlying GPs—and pays for it through the funds' fee structures rather than duplicating those capabilities internally.
5. The Liquidity Reserve Strategy
Using the listed securities portfolio as a buffer for PE capital calls is elegant risk management. Private equity commitments are "blind pool" arrangements where LPs don't know exactly when capital will be called or when distributions will arrive. Having a liquid, high-quality equity portfolio provides the flexibility to meet calls without forced selling at inopportune moments.
6. Family Alignment
When controlling shareholders are also management, agency costs largely disappear. The Van der Mersch family eats their own cooking—and has done so for over 50 years. This creates powerful incentives for conservative risk management, genuine long-term thinking, and avoidance of value-destroying empire building.
7. Dividend as Discipline
The commitment to 22 consecutive annual dividend increases serves as an internal discipline mechanism. It forces management to maintain sufficient liquidity, to harvest gains from the PE portfolio through exits, and to balance growth with shareholder returns. A company can't sustain a 22-year dividend growth streak by accident.
VIII. Competitive Analysis & Economic Moat Assessment
Porter's 5 Forces Analysis
Threat of New Entrants: LOW (Favorable)
Access to top-tier PE funds requires decades of relationship-building and an impeccable track record. This success is achieved through the rigorous selection of an international network of high-level managers, accompanied by ongoing monitoring. The extensive experience accumulated by Brederode in this regard has contributed greatly to the company's overall performance for many years. A new entrant couldn't simply raise capital and expect commitments from Carlyle's next flagship fund. GP relationships are earned over multiple fund cycles.
Supplier Power (PE Funds): MODERATE
Top GPs are selective about their LP base—they can afford to be. Oversubscribed funds routinely turn away capital. But Brederode has earned its place through a 30+ year track record of reliable capital deployment and the reputational benefits of association with a family-controlled, long-term investor.
Buyer Power (Shareholders): LOW (Favorable)
Shareholders are price-takers in public markets. More importantly, the ~60% family control means no activist pressure. Unlike US-listed PE vehicles that occasionally face pressure to collapse NAV discounts through buybacks or liquidation, Brederode's controlling shareholder has no interest in short-term financial engineering.
Threat of Substitutes: MODERATE
ETFs offering "private equity factor" exposure, direct PE co-investment platforms (like iCapital), and other listed PE vehicles (3i, Partners Group, ICG) exist. But Brederode's specific structure—self-managed, family-controlled, Belgium-domiciled with Luxembourg incorporation—is unusual enough to limit direct substitution.
Competitive Rivalry: LOW-MODERATE (Favorable)
3i Group plc is a British multinational private equity and venture capital company based in London, England. 3i is listed on the London Stock Exchange and is a constituent of the FTSE 100 Index. The company was formed in 1945, as the Industrial and Commercial Finance Corporation (ICFC), by the Bank of England and the major British banks to provide long-term investment funding for small and medium-sized enterprises.
3i operates a very different model—concentrated direct holdings rather than fund-of-funds. 3i isn't your typical private equity trust, with the vast majority (around 60%) of its entire asset base tied up in European supermarket retailer Action, which has driven a large part of 3i's strong returns. The fund boasts an almost 68% premium to net asset value (NAV). Brederode's diversified fund-of-funds approach offers a fundamentally different risk/return profile.
Hamilton's 7 Powers Analysis
Scale Economies: âś“ Partial
Below-market management costs as portfolio grows; fixed costs spread across €4+ billion. The 0.08% expense ratio wouldn't be achievable at €500 million scale.
Network Effects: âś“ Yes
Access to top GPs improves as track record lengthens; GPs prefer reliable, repeat LPs. Brederode's 30+ years of PE investing creates a virtuous cycle: track record → better fund access → better returns → stronger track record.
Counter-Positioning: âś“ Strong
"One of those rare companies specializing in Private Equity, listed on the stock market and self-managed"—traditional PE firms can't offer public market liquidity; traditional asset managers can't match the family alignment and 50-year investment horizon.
Switching Costs: âś“ Moderate
10-12 year fund commitments create lock-in. More importantly, GP relationships are not easily transferable—a new vehicle couldn't inherit Brederode's decades of relationship capital.
Branding: â—‹ Weak
Deliberately low-profile. There are those who communicate little or not at all, because they are subject to local restrictions or have opted for discretion. This is the case with the listed company Brederode, which has Belgian roots and has its head office and team in Luxembourg. Sometimes dubbed "the Belgian Warren Buffet," its founder Pierre van der Mersch is also regarded as a pioneer of private equity.
Cornered Resource: âś“ Strong
30+ years of GP relationships; institutional knowledge; Van der Mersch family capital and patience. These resources cannot be purchased or replicated quickly.
Process Power: âś“ Strong
Funds tend to follow buyout strategies that focus on acquiring a controlling interest and using financial leverage in mature companies. Investments are chosen after a due diligence process that includes managerial interviews and examination of ad hoc documents.
Moat Assessment: Brederode possesses a durable competitive advantage through its unique combination of counter-positioning (publicly-traded, self-managed PE access vehicle), cornered resource (GP relationships built over three decades), and process power (rigorous fund selection methodology). The moat is wide but quiet—exactly as the Van der Mersch family prefers.
IX. Analysis: The Bear Case vs. The Bull Case
The Bull Case
1. PE Outperformance Thesis
Private equity has historically outperformed public markets by 300-500 basis points annually over full cycles. Brederode provides liquid access to this premium—albeit with a layer of fees to the underlying GPs.
2. NAV Discount Opportunity
Brederode frequently trades at a discount to net asset value, creating a potential margin of safety. Investors effectively buy €1 of PE assets for less than €1.
3. Track Record
The internal rate of return (IRR) of the PE portfolio over the past ten years stood at 16.6% in 2024. A 16%+ IRR over a decade that included the COVID crash, the 2022 rate shock, and multiple geopolitical crises speaks to manager selection skill and portfolio resilience.
4. US Exposure
66.4% of the portfolio is invested in the United States—exposure to the world's deepest, most sophisticated PE market through a EUR-denominated vehicle.
5. Family Alignment
60%+ family ownership with generational wealth at stake. No agency problems, no short-term thinking, no empire building.
6. Operational Leverage
Seven employees managing €4+ billion. The cost structure allows nearly all returns to flow to shareholders rather than management fees.
The Bear Case
1. J-Curve Risk
New PE commitments take years to generate returns; capital is locked up during the early "J-curve" period when fees exceed gains. Rapid deployment into new vintages can depress near-term returns.
2. Valuation Opacity
Brederode is not an easy investment to evaluate due to this limited information. Investors must rely primarily on their track record. The underlying PE investments are marked to model, not market, creating potential for valuation surprises.
3. PE Cyclicality
Rising interest rates hurt leveraged buyouts by increasing financing costs and compressing multiples. The 2022-2023 environment demonstrated this sensitivity, with Brederode posting a loss in 2022 before recovering.
4. Currency Risk
66% US exposure creates significant EUR/USD translation risk. A strengthening euro can erase investment gains when translated back to the reporting currency.
5. Liquidity Mismatch
A listed vehicle holding illiquid assets creates potential for NAV discount widening during market stress. If shareholders rush for the exit, the stock can fall below asset value with no mechanism for arbitrage.
6. Key Person Risk
Family-controlled with concentrated decision-making. The succession from Pierre Van der Mersch to the next generation of leadership—while well underway—represents transition risk.
7. Limited Reinvestment
Dividend commitment (22 consecutive increases) limits capital available for reinvestment. A fully growth-oriented approach might compound faster but would sacrifice the discipline dividends impose.
Key KPIs to Monitor
For investors tracking Brederode's ongoing performance, three metrics matter most:
1. NAV per Share Growth vs. Stock Price
The discount or premium to NAV reveals market sentiment toward Brederode's portfolio. Persistent discounts may indicate skepticism about valuations; premiums suggest confidence. Track both the absolute NAV growth and the stock's relationship to it.
2. PE Portfolio IRR by Vintage Year
The ten-year rolling IRR captures long-term performance, but investors should also monitor whether recent vintages are tracking toward historical returns. Deteriorating vintage IRRs could signal manager selection problems or structural PE market headwinds.
3. Dividend per Share Growth
The consecutive increase streak is both a discipline mechanism and a canary in the coal mine. Any break in the streak would signal either liquidity stress or a fundamental change in capital allocation philosophy.
X. Epilogue: What Does the Future Hold?
The transfer of power from Pierre Van der Mersch to the next generation is the most immediate question facing Brederode. Pierre Van der Mersch, the now-88-year-old French-speaking stock market investor, is more than a copy of Warren Buffett. It can sound a little cynical that he is now handing over his mandate as chairman of Brederode at age 88 to Bruno Colmant, himself a product of classic bankers.
Bruno Colmant earned a PhD in applied economics from the Free University of Brussels and a Master of Science from Purdue University (USA). He is a member of the Belgian Royal Academy. The author of some 90 books, he has previously held management positions at ING, AGEAS and Degroof Petercam. He was also chairman of the Brussels Stock Exchange and a member of the executive committee of the New York Stock Exchange. He is a member of the Board of Directors with several companies, including I-Care and the Brederode holding company, where he is chairman.
Colmant's appointment represents an interesting choice—an academic economist and former banking executive rather than a family member. The selection suggests the Van der Mersch family prioritizes professional governance over dynastic control, at least at the chairman level, while retaining operational involvement through Axel Van der Mersch and Luigi Santambrogio.
The broader question is whether Brederode's access model will remain viable as private equity itself evolves. Mega-funds have grown ever larger, potentially straining even established LP relationships. Secondaries markets have created new liquidity options. And the rise of retail-focused PE products—ELTIFs in Europe, interval funds in the US—may eventually democratize PE access more directly.
The more flexible ELTIF 2.0 framework, applicable since January 2024, has led to the result that Luxembourg ELTIF structures reflect around 70% of Europe's market share in ELTIFs. They create opportunities for retail investors to invest in alternative investment products like private equity.
For now, Brederode occupies a unique niche: genuinely liquid, genuinely diversified PE exposure with genuine family alignment and genuine cost advantage. Whether that niche expands or contracts over the coming decades depends on factors largely outside Brederode's control—the evolution of PE as an asset class, regulatory changes, and the appetite of European retail investors for alternative assets.
What remains constant is the Van der Mersch family's multi-generational perspective. When your investment horizon is measured in decades rather than quarters, when your family's wealth is entirely concentrated in the vehicle you manage, when you've survived world wars, colonial upheaval, and the complete transformation of the European economy—a few years of PE market headwinds look manageable.
Today Brederode heads a medium-sized group with a streamlined structure and has the knowhow to invest on four continents from two major operational centres: London and Luxembourg. Brederode's history does not stop here. New pages are being written every day.
After 220 years, that might be the most important insight of all: Brederode isn't optimizing for this quarter, this year, or even this decade. It's building wealth across generations—a time horizon that most investors can barely comprehend but which explains nearly everything about how this quiet compounding machine operates.
Myth vs. Reality: Brederode Edition
| Common Perception | Actual Reality |
|---|---|
| "Small, obscure Belgian holding company" | €4+ billion portfolio with access to Carlyle, Bain, EQT, and other top-tier GPs |
| "Colonial legacy company" | Complete strategic transformation in 1977; PE operations since 1992 |
| "Family vanity project" | 60%+ family ownership creates powerful alignment with minority shareholders |
| "Expensive fund-of-funds" | 0.08% expense ratio vs. 0.5-1.0%+ for typical PE access vehicles |
| "Illiquid PE exposure" | Listed on Euronext Brussels with daily trading liquidity |
Material Regulatory Note: Brederode is incorporated in Luxembourg and subject to Luxembourg corporate law and CSSF financial supervision. The company is dual-listed on Euronext Brussels and the Luxembourg Stock Exchange. Fair value measurements for the PE portfolio rely primarily on unaudited GP valuations, creating inherent valuation uncertainty. Currency exposure is substantial given the 66% US allocation. Past performance, including the 16.6% ten-year PE IRR, is not indicative of future results.
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