Why Private Equity Still Matters: A Long-View Perspective from Anico Capital

Private equity has always drawn outsized attention — sometimes celebrated as the engine behind innovation and long-term wealth creation, and other times scrutinized for its complexity, opacity, and increasingly uneven performance. Recent headlines suggest that the “golden era” of private equity may be fading: distributions have slowed, interest rates have risen, and institutional allocators are re-evaluating their commitments.

At Anico Capital, we believe this moment is not a signal of the asset class’s decline, but rather a healthy reset — one that will ultimately restore discipline, improve valuations, and better differentiate high-quality managers from the rest. More importantly, it is a moment that calls for nuanced thinking, not reactionary narratives.

Private equity is not a monolith, nor is it a quick-turn vehicle. It is a long-term partnership between capital and business transformation. When evaluated through this lens, we remain confident that private equity continues to earn its place in a modern, globally diversified portfolio.

The Enduring Case for Private Equity

1. Access to a Larger and More Dynamic Universe of Companies

Public markets represent only a fraction of today’s investable landscape. In North America alone, the majority of mid-sized and large enterprises remain privately held. Restricting capital solely to public markets creates an incomplete picture of economic activity and innovation.

Private equity provides access to:

• privately-held category leaders

• earlier-stage high-growth companies

• specialized sectors too small or too complex for public listing

• global opportunities beyond major exchanges

For investors seeking exposure to the real engine of corporate growth, private markets remain indispensable.

2. Transformational Ownership, Not Passive Exposure

Unlike public equities, where ownership is largely observational, private equity is built on an active value-creation model.

Top managers do more than provide capital — they reshape companies. They:

• streamline operations

• implement strategic growth plans

• professionalize management teams

• modernize technology and processes

This hands-on involvement is a key driver of private equity’s historical outperformance relative to public markets over multi-year cycles.

3. A Valuation Reset That Favors Patient Capital

Rising interest rates have tightened financing conditions and pressured valuations. While this has created short-term challenges, it has also pushed pricing back to more rational, attractive levels — a healthy development after years of elevated deal multiples.

For investors entering new commitments today, the environment offers:

• better entry pricing

• improved risk-return asymmetry

• a stronger foundation for future multiple expansion

Market resets are uncomfortable, but they also create some of the best future vintages.

4. Diversification Through Market Structure, Not Just Volatility

Critics argue that private equity appears “less volatile” only because it is not priced daily. This is partially true — but it misses the deeper diversification benefit.

Private companies often:

• operate in different segments than public peers

• experience different economic sensitivities

• follow operational rather than market-driven cycles

Even when marked fairly, private equity returns are shaped more by long-term business fundamentals than short-term sentiment. This structural difference strengthens portfolio resilience over time.

The Real Constraints Investors Must Respect

Private equity is powerful, but not universally suitable. At Anico Capital, we emphasize clarity around the limitations:

• Illiquidity: capital is locked up for 8–12+ years.

• Delayed distributions: liquidity events depend on market conditions.

• High minimum commitments: difficult for smaller investors to diversify across managers and vintages.

• Limited transparency: reporting and valuations are less frequent and less standardized.

• Complex fees: layered, performance-based structures require careful evaluation.

These characteristics are not “risks to avoid,” but structural features to be planned for. When integrated thoughtfully, they become manageable — and often rewarding.

How Anico Capital Approaches Private Equity Allocation

1. Manager Quality Over Market Timing

The dispersion between top-quartile and bottom-quartile managers in private equity is far wider than in public markets. We prioritize:

• teams with repeatable value-creation playbooks

• measured deployment pace

• demonstrated alignment with investors

• transparent, discipline-driven underwriting

In private equity, who you invest with matters as much as what you invest in.

2. Building Through Vintage Diversification

We construct private market exposure gradually, allocating across vintages, strategies, and geographies to mitigate the cyclicality of deal momentum and valuations.

This “laddering” approach smooths capital calls, improves liquidity planning, and captures opportunities across market cycles.

3. Alignment With Long-Term Liquidity Needs

Private equity should enhance wealth — not disrupt it. Before allocating, we map out:

• household liquidity requirements

• expected cash flow events

• existing illiquid exposures

• long-term portfolio modeling

Our stance is conservative: it is better to be slightly under-allocated than overcommitted.

4. Focus on Net Outcomes, Not Gross Multiples

Headline returns can be misleading. We focus on:

• net IRR and multiple after all fees

• fee structures and waterfalls

• manager discipline around leverage

• capital efficiency over the full deal lifecycle

Net returns — the dollars that end up in the client’s hands — are the true measure of performance.

Our View: Private Equity Is Evolving, Not Declining

Periods of slower distributions and tighter financing are part of the natural private-equity cycle. What we are witnessing now is not the collapse of an asset class, but the repricing of risk after a decade of cheap money.

This environment favors:

• operational excellence

• disciplined underwriting

• patient capital

• investors who take a long-view approach

At Anico Capital, our belief is simple: for families with long-term horizons and sufficient liquidity, private equity remains a powerful driver of wealth creation and diversification.

Structural advantages do not disappear because of a challenging cycle — if anything, they become clearer.

Final Thoughts

The narrative surrounding private equity will continue to fluctuate. Sentiment will rise and fall, markets will expand and contract, and capital will rotate across strategies. But the fundamental value proposition remains intact: access, transformation, diversification, and long-term wealth generation.

Private equity has never been about timing market sentiment — it has always been about aligning with long-term economic value creation. And that philosophy is deeply embedded in the way Anico Capital invests.