Private Markets Investing

We spent the last 3 months researching how PE firms create value 🌱 The result: “The Private Equity Value Creation Report” — one of the most in-depth studies on the topic, based on the data from over 10,000 PE entries and exits globally. 𝟳 𝗸𝗲𝘆 𝘁𝗮𝗸𝗲𝗮𝘄𝗮𝘆𝘀: 1️⃣ Revenue growth is the largest driver of PE value creation On average, it contributes to 54% of value creation. Recently, revenue growth has become an even more critical driver of success (as multiples have come down), contributing to ~65-70% of value creation in the last 2 years. 2️⃣ Margin expansion plays a smaller role at 15% Margin expansion is most impactful when PE firms target operationally challenged businesses rather than already-efficient businesses. 78% of deals with negative EBITDA margins achieved margin expansion (median +1250bps), while businesses with high EBITDA margins (>30%) typically saw margin contraction. 3️⃣ Multiple expansion contributes significantly at 32% For the top quartile deals, its contribution is even higher at 40%.  By sector, TMT, Science & Health, and Services see the largest multiple expansion. Consumer and Industrials see the least. By size, multiple expansion is the highest for smaller deals under $100M EV. 4️⃣ Growth amplifies all other PE value creation drivers Growing companies benefit from operating leverage and are more likely to achieve margin expansion. 58% of growing firms expand margins compared to 44% of those with negative growth. Higher-growth companies also typically command 30–50% higher multiples at exit. 5️⃣ Top and bottom-performing deals are held the longest Investors hold onto the best-performing assets for greater upside but also hold the worst, trying to fix the business. Assets held in the 3-6 year range tend to cluster around more predictable, moderate returns. 6️⃣ Buy-and-build is central to PE value creation When done right, buy-and-build bolsters all three value creation drivers: revenue growth, margin expansion, and multiple expansion. Buy-and-build works at any size, but the uplift is strongest in small platforms. The multiple arbitrage strategy still works with add-ons trading at a 20% discount to platforms. 7️⃣ Larger deals drive more margin expansion Large businesses ($1bn+ EV) and public-to-private deals, on average, deliver more margin expansion. Smaller businesses, on the other hand, rely more on growth and multiple expansion to drive returns. Given the smaller size, returns on average, are also higher for family-to-sponsor deals. _______ 𝗙𝘂𝗹𝗹 𝗥𝗲𝗽𝗼𝗿𝘁 Don’t miss out on insights: 💡 By Sector 💡 By Deal Type and Size 💡 MOICs and Loss rates + 5 case studies and 43 charts. Get it here ➡️ https://lnkd.in/d9Z3kubU (E-mail required) #ValueCreation #Growth #PrivateEquity

Africa doesn’t have a risk problem—it has a perception problem. For years, investors have treated African markets as uniquely risky. Higher borrowing costs. Depressed equity valuations. An overblown fear of instability. But here’s the kicker: when we look at the data, a more nuanced picture emerges. Take infrastructure. -Default rates on African projects? 5.5%. -In Asia, it’s 11.9%. -In Latin America, 14.5%. Yet Africa still pays a higher risk premium. Or take equity markets: -The 500 most valuable listed African firms deliver an average ROE of 15%. -Despite strong fundamentals, they trade at significant valuation discounts compared to global peers. Why the disconnect? An information gap. 📉 Credit ratings that don’t fully capture fundamentals 📊 Limited access to private-sector data, making risk harder to quantify 💰 Fragmented and less liquid financial markets None of this is to say that investing in Africa is without risk—far from it. Like any emerging market, challenges exist. But the question is whether those risks are being accurately priced or if narratives are leading to unnecessary overcorrection?

The Rise of African Family Offices! “Africa doesn’t need more venture capital — it needs more patient family capital.” For too long, Africa’s investment narrative has been dominated by venture capital — chasing quick exits, high returns, and fast growth. But Africa’s greatest opportunities aren’t found in short-term plays. They’re built through patient, purpose-driven capital that stays long enough to shape industries, empower entrepreneurs, and create generational impact. 💼 VC vs Family-Office Capital Venture Capital: ⚡ Short-term, exit-driven, milestone obsessed. 💸 External LPs, 5-10 year horizons, rapid scaling. Family Offices: 🌍 Long-term, values-driven, intergenerational. 🏗 Built for stewardship, legacy, and real-world impact. In Africa, this shift matters — because building industries like energy, agriculture, healthcare, education, and infrastructure takes decades, not funding rounds. 🧭 Fio Capital’s Approach At Fio Capital, we’ve adopted a buy-and-hold philosophy. We invest patient family capital into core impact industries — creating jobs, driving inclusion, and building sustainable African enterprises. We don’t just invest in Africa. We invest with Africa — alongside founders and families who share a vision of conscious, generational wealth creation. 🌱 From Wealth Preservation to Impact Creation A mature family office isn’t just about protecting assets — it’s about preserving purpose. Wealth without wisdom fades. Stewardship ensures legacy. Africa’s next generation of family offices is redefining success — not in terms of ROI alone, but in return on impact, return on integrity, and return on community. 🏆 5 African Family Offices to Watch 1️⃣ Heirs Holdings (Nigeria) — Tony Elumelu’s family office driving investments in power, finance, and healthcare. 2️⃣ Tengen Family Office (Nigeria) — founded by Aigboje Aig-Imoukhuede & Herbert Wigwe, focused on long-term value creation. 3️⃣ Oppenheimer Generations (South Africa) — Nicky & Jonathan Oppenheimer’s vehicle, investing in sustainability and African industry. 4️⃣ Dangote Family Office (Nigeria) — Aliko Dangote’s global expansion vehicle for African industrial growth. 5️⃣ Mary Oppenheimer Daughters (South Africa / UK) — diversified investments across private equity and real assets. Do you believe family offices should take a more active role in building Africa’s industries — beyond just preserving wealth? 👉 Comment your view below — or tag a family-office leader shaping the continent’s next chapter.

The Opportunity for Private Equity in Climate Adaptation 🌍 2024 was the hottest year on record, with temperatures rising 1.55°C above pre-industrial levels. Extreme weather events are creating systemic risks for economies and businesses. Damages from climate change are already surpassing the costs of mitigation. If warming reaches 3°C by 2100, corporate profits could decline by 5 to 25%. Global adaptation needs are projected at $0.5T to $1.3T annually by 2030, compared with current spending of around $76B. This gap represents a significant investment frontier. Governments will fund much of this effort, but private capital is essential to scale solutions. Public policy creates demand certainty while investors provide innovation and capacity. The Climate A&R Opportunity Map identifies seven themes: food, infrastructure, health, water, energy, biodiversity, and community resilience. Two market categories dominate: early-stage pure-play innovators and large diversified incumbents integrating A&R activities. Both provide different investment pathways. Six subsectors stand out for near-term action: climate intelligence, resilient building materials, flood defense, agricultural inputs, water efficiency, and emergency medical solutions. Attractive subsectors combine strong benefit-cost ratios, manageable financing models, and clear demand signals from both public and private actors. Markets are highly localized. Wildfire management is prominent in North America, drainage systems in Asia, and flood basins in Europe. This enables geographic expansion and roll-ups. Investment strategies include buyouts of mature companies, growth capital for scaling, and venture investment in high-potential innovators. Value creation can be achieved through portfolio alignment, geographic expansion, vertical integration, and pursuing solutions that deliver both resilience and decarbonization benefits. Climate adaptation and resilience offers a financial and societal opportunity. Early investors can capture emerging value pools, support resilience, and shape a defining market of the future. #sustainability #business #sustainable #esg

Family Offices Are Breaking Up with Wall Street—And Finding Better Deals Elsewhere The stock market has long been the go-to playground for investors, but for many Family Offices, the thrill is gone. Chasing quarterly earnings and riding out market swings has lost its appeal. Instead, they’re putting their capital to work in private markets, where they can call the shots, build meaningful partnerships, and capture returns that aren’t dictated by headlines. This shift isn’t just about returns—it’s about access, control, and long-term value. Rather than funneling money into traditional fund structures, many Family Offices are opting for direct investments, co-investments, and strategic partnerships. Whether in private equity, venture capital, real estate, or credit, they’re seeking opportunities that offer flexibility and upside without the constraints of public markets. Private credit is a prime example. With banks pulling back on lending, Family Offices have stepped in, offering businesses the capital they need on customized terms. The result? A win-win scenario where investors secure attractive yields while businesses gain funding without jumping through institutional hoops. Beyond financial returns, private markets provide an avenue for values-driven investing. Many Family Offices are backing companies that align with their long-term vision, whether in sustainability, innovation, or industry disruption. Unlike public market holdings, these investments allow for direct involvement and a real stake in shaping the future. Of course, navigating private markets requires patience and expertise. Without the liquidity of publicly traded assets, these deals demand thorough due diligence and a clear strategy. But for those willing to engage at this level, the rewards far outweigh the risks. With more Family Offices embracing this approach, private markets are no longer just an alternative—they’re becoming the main event. And as the lines between capital and influence continue to blur, one thing is clear: the smartest money isn’t following the market. It’s leading it.

For the first time in venture history, three distinct channels share the liquidity burden roughly equally. A decade ago, secondaries barely registered. They accounted for roughly 3% of exit value in 2015. Today they claim 31% : nearly $95b in the trailing twelve months. The shift accelerated after 2021’s IPO bonanza. When public markets closed their doors in 2022, investors found alternative routes. Secondaries absorbed demand that would have flowed to traditional exits. When Goldman Sachs acquired Industry Ventures, the transaction signaled secondaries have arrived. Morgan Stanley followed with EquityZen, then Charles Schwab announced its acquisition of Forge Global. Wall Street recognized the structural change before most of venture did. This matters for founders & investors. When IPOs dominated exits, fund models assumed a small number of public offerings would generate the bulk of returns. Now liquidity arrives through multiple doors. A founder might sell secondary shares to patient capital while the company remains private. A GP might move positions through continuation vehicles. An LP might trade fund stakes on an increasingly liquid secondary market. The 830 unicorns holding $3.9t in aggregate post-money valuation cannot all exit through IPOs. The math doesn’t work. At 2025’s pace of 48 VC-backed IPOs, clearing the unicorn backlog would take seventeen years. Secondaries provide a release valve that traditional exits cannot. Companies like OpenAI have embraced this reality, running employee tender offers while voiding unauthorized secondary transfers. The largest private companies now manage their own liquidity programs rather than waiting for public markets. Today, secondary liquidity concentrates in the top 20 names. SpaceX, Stripe, OpenAI. For the founder of company #50, the secondary market remains largely theoretical. For secondaries to succeed as a broad asset class, buyers must underwrite positions in companies without household recognition. As the market grows, this coverage gap becomes opportunity. For LPs starved of distributions since 2022, the expansion of secondary channels offers hope. The $169b in cumulative negative net cash flows needs somewhere to go. More exit paths mean more opportunities to return capital. When a Series B employee asks about liquidity today, the answer isn’t “wait for the IPO.” It’s “we’re planning a tender offer next year.” A decade ago, secondaries were a footnote. Now they’re infrastructure. Liquidity flows where it can, not where tradition suggests it should.

Today we launch the 8th edition of our Private Markets Study. Our latest research, based on insights from 500 institutional investors representing $6.5 trillion in assets, shows private markets entering a more mature phase. Allocations continue to rise, but the focus is shifting from expansion to optimisation. Investors remain confident in the long-term role of private markets, particularly in their ability to deliver diversification, income and long-term compounding. What has changed is how that capital is being deployed. The illiquidity premium has moved firmly centre stage, alongside greater scrutiny of governance, liquidity management and return quality. The study also highlights growing demand for flexibility and control, with co-investments, evergreen structures and bespoke mandates becoming increasingly important as investors tailor private markets exposure to their specific objectives and constraints. While near-term caution has increased, long-term conviction remains strong. More than three quarters of investors expect private markets to outperform public assets over a five-year horizon. A huge thank you to the teams and colleagues across Aviva Investors who brought this year’s Private Markets Study to life, an exceptional effort. I hope the findings provide a useful perspective for those navigating an evolving private markets landscape. You can download the full report here: https://bit.ly/3MdscR7 #PrivateMarketsStudy

In the past 10 months at EY SaT, I have worked on numerous deals and dealt with around 3 Private Equity Firms. Across all the deals, one thing became clear - PE investors look at businesses through a very specific lens. In this post, let’s discuss the key factors they analyze, with real-world examples: 1] Sustainable & Scalable Business Model PE funds are not just looking for revenue growth - they want businesses with a model that can scale efficiently. Example: A D2C brand with ₹500 Cr revenue may seem attractive, but if its customer acquisition cost is high and repeat purchases are low, investors will think twice. Compare this to a SaaS company with predictable recurring revenue—investors would lean towards the latter. 2] Unit Economics & Profitability Cash burn is fine, but only if backed by strong unit economics. Example: A food delivery startup with ₹100 per order revenue but ₹150 cost per order (even after discounts) is a red flag. On the other hand, a logistics company with a clear path to breakeven per delivery is much more attractive. 3] Industry Tailwinds & Competitive Advantage PE investors assess whether the industry itself has strong growth potential and if the company has a sustainable edge over competitors. Example: Fintech lending is booming, but does the company have a unique underwriting model, regulatory approvals, or a sticky customer base? Without these, it’s just another player in a crowded space. 4] Governance & Compliance Risks A company with strong growth but weak compliance is a ticking time bomb for investors. Example: Many startups in the past have faced issues due to financial misreporting or governance lapses, leading to massive devaluations (WeWork being a classic case). A PE fund will conduct rigorous due diligence to avoid such risks. 5] Exit Potential & Value Creation PE investors don’t just invest—they need a clear plan for exiting with strong returns. Example: If a company has a strong IPO pipeline, potential M&A interest, or clear secondary sale opportunities, it becomes a far more attractive bet. CRUX At its core, PE investing is about value creation—identifying businesses that are fundamentally strong and helping them scale further. If you were a PE investor, what factors would matter the most to you? Let’s discuss in the comments!

4 out of the 5 fastest-growing economies in the world right now are in Africa. Yet Africa receives less than 3% of global private equity flow. Why the disconnect? Most global capital is still deployed based on 20th-century perceptions of volatility. But look closer at the "Value Drivers" behind these numbers: ✅ Resource Monetisation: Guinea isn't just growing; it's unlocking the Simandou iron ore deposit—the world's largest untapped high-grade reserve. ✅ Infrastructure Catalysts: In Uganda, growth is anchored by the East African Crude Oil Pipeline (EACOP), creating a massive regional multiplier effect. ✅ The "Base Effect" Rebound: While countries like South Sudan and Sudan are recovering from deep contractions, the speed of their return signals a resilient underlying economic pulse. The Africa Risk Premium is often more about a lack of data and local expertise than it is about actual default probability. The real alpha in the next decade won't be found in saturated Western markets. It will be found in the delta between perceived risk and actual expansion. The engine of global growth has moved. Follow me on X to see more African business and investment insights: https://lnkd.in/emaBdY_4

The decision to go public is one of the most critical crossroads for any company—and it’s not as straightforward as it used to be. Experts like Bill Gurley often champion the benefits of IPOs: cheaper capital, increased accountability, and the discipline that comes with operating under public scrutiny. And he’s not wrong—when a company scales, that accountability can push it toward being a healthier, more sustainable business. But the landscape has shifted. In 2023, there were 154 IPOs on the US stock market, compared to 181 in 2022. Both were significantly lower than the record-breaking 1,035 IPOs in 2021. Many companies that seemed unstoppable a few years ago now fall short of the benchmarks expected by public markets. Investors are hesitant to bet on high-risk startups when they can back established players like NVIDIA or Amazon, still posting double-digit growth. And then there’s the founder mindset. The old playbook said IPOs were the ultimate flex. Now, autonomy is the goal. Founders are asking, “Why hand over control when private markets can give me the cash I need without the headaches?” Liquidity options in private markets have leveled up, and many companies are staying private longer, dodging the scrutiny and rollercoaster ride of going public. That said, it’s not all smooth sailing. Some companies get stuck in messy deals to avoid down rounds, which makes going public later even more complicated. Sure, players like SpaceX and Stripe are thriving, but plenty of others are stuck in no man’s land—neither crushing it privately nor ready to IPO. The reality? There’s no universal playbook. For some, the public markets bring the discipline and access they need to hit the next level. For others, staying private keeps their autonomy intact and simplifies their path forward. The real question isn’t just “When should we go public?”—it’s “Why does it make sense for us?” And that depends entirely on your company.