How to invest in the mega-IPOs of the future

Annabel Brodie-Smith, Communications Director of the Association of Investment Companies (AIC), said: “Under normal circumstances, retail investors can’t access shares in private companies unless they are very wealthy. But investment trusts offer investors a route into these companies during the early stages of their growth, which are often when the most spectacular gains are made. These funds buy stakes in promising companies and help them grow until they are big enough to be snapped up by multinational competitors, or float on the stock market to continue their expansion.”

The Association of Investment Companies (AIC) asked private equity investment trusts about the most exciting companies in their portfolios. Their responses are collated below.

Steven Tredget, Partner at Oakley Capital, the manager of  Oakley Capital Investments, said: “We typically sell our businesses to other private equity firms or to strategic buyers –other corporates. Amongst the companies we’re particularly excited about are these three. First, TechInsights; have you ever wondered how the tech in your smartphone works? This company is a tear-down specialist: it deconstructs every new iPhone or Samsung Galaxy, every new chip that is developed, to unlock the inner workings and secrets of innovative technologies that underpin many of today’s most exciting technologies, including AI. 

“The CEO, Gavin Carter, has successfully created a lot of value at multiple businesses. During the past ten years he has sold three companies in transactions worth hundreds of millions of dollars and he’s currently doing a sterling job at TechInsights.

“Another company, vLex, was founded by two Spanish tech entrepreneurs Angel and Lluis Faus. They had a vision to create a legal tech information platform as an online library of global legal and regulatory information. Oakley Capital invested in the business in 2022. Fast forward four years, and vLex has successfully pivoted its entire business model through the launch of a transformational AI tool that empowers lawyers to construct legal arguments and prepare cases. 

“Oakley sold vLex in 2025 in a transaction that valued the business at US$1 billion, making it one of the few Spanish technology start-ups to reach unicorn status. Oakley continues to retain a stake in vLex to this day.

“Finally, Cambridge-based CuspAI uses artificial intelligence to help discover new materials. 

Its ‘inverse design’ technology is said to have a wide range of uses from improving chip design to sustainable energy and improving the environment. Its customers include chip equipment manufacturer ASML, Big Tech group Meta and automaker Hyundai. They use its technology to design and simulate new materials with the properties they need to develop new products. 

“CuspAI was founded by Dr Max Welling and Dr Chad Edwards. Max sits in a rarified group of world-leading machine learning researchers and Chad is a computation chemist who has spent his career in deep tech commercialisation. It was recently reported that Jeff Bezos is backing the business in a $400m funding round that will more than quadruple the two-year-old AI company’s valuation to $2.6bn.”

Alan Gauld, Managing Director and Lead Portfolio Manager of Patria Private Equity Trust, said: “If I were to pick one business right now, I would highlight Wundex, a specialty healthcare services business in Germany, which treats complex patient wounds that are hard to heal. It’s a win-win for both hospitals and patients, as patients with complex wounds can be treated at home or a local clinic, rather than in a hospital. The company has grown incredibly strongly since Patria invested directly alongside the lead investor Capiton and is now our largest portfolio company. Originally it was a €100m business when we invested in 2021 and now it’s almost quintupled in size.

“Another would be Omilia, where we made a direct investment alongside Expedition Capital in this conversational AI business which automates customer service with voice AI agents. As an example, Omilia has automated order-taking across over 890 Taco Bell drive-throughs in the US. The business has grown its revenues by more than 70% a year over the last five years.

“We also have a direct investment in Bluu Unit, a services business focused on installing and servicing cooling systems, which is obviously seeing very strong demand given the cooling requirements for data centres. On the back of strong organic growth as a result of these tailwinds, and accretive add-on acquisitions, Bluu Unit has more than doubled its earnings since we entered the business in 2024, alongside the lead investor Triton. We then increased our exposure to Bluu Unit by making a further direct investment in early 2026.”

Oliver Gardey, Co-Portfolio Manager at ICG Enterprise Trust, said: “Our portfolio companies benefit from structural tailwinds that can support growth through different economic environments. For example, Brooks Automation is a provider of semiconductor manufacturing solutions; it benefits from the rapid digital advancements in technology and productivity and has strong margins. 

“Meanwhile, Stout is a specialist professional services firm providing valuation services, and benefits from increasing regulation and the buildout of financial infrastructure across economies. Another good example is European Camping Group, the leading owner-operator of camping sites across Europe, which has recorded double-digit revenue and earnings compound annual growth rate over recent years, benefiting from changing consumer spending patterns.”

What is the typical growth in valuation from entry to exit? 

Colm Walsh, Co-Portfolio Manager of ICG Enterprise Trust, said: “As an example, in the 12 months to 31 January 2026, ICG Enterprise Trust had 49 full exits which generated a 3x weighted-average multiple of cost. The equivalent figure was 2.9x for the year before, and 3.5x the year before that. We aim for that resilient and consistent growth profile, rather than relying on a handful of standout winners. Saying that, ICG Enterprise Trust is the longest listed of all the private equity investment trusts so there are some standout winners. One is Telos, a cybersecurity company we sold in 2021 for a 33x return.”

Alan Gauld, Managing Director and Lead Portfolio Manager of Patria Private Equity Trust, said: “Patria is focused on European mid-market buyout companies which are often niche market leaders, growing and profitable. Patria has no exposure to venture capital, so we tend to see steady valuation growth from our investments with exits on average being made at 2x to 2.5x the original cost over a four to six year holding period. We obviously see outperformers and underperformers but focusing on this area of the mid-market has given Patria consistent returns compared to the venture capital sector – where you may get an incredible success story like SpaceX, but also many investments that don’t work out. It’s a different risk profile.”

Steven Tredget, Partner at Oakley Capital, the manager of Oakley Capital Investments, said: “Most of our investments are in founder-led businesses: they tend to be exceptional entrepreneurs with skin in the game: this means our interests are aligned. Often these founders come to us because they need help with overseas expansion, particularly into the US, or hiring a talented management team to help them grow the business, making better use of their data, or harnessing the best AI tools. We typically invest for three to five years and then hopefully sell at a profit: historically, we’ve made just under four times our money on average, and we typically sell at around a 30% premium to the value at the time, which may have risen dramatically during the period we were investors.”

How do you create value at your investee companies?

Charlotte Morris, Partner at Pantheon and Lead Manager of Pantheon International, said: “The kind of private equity managers that we are backing are very different to the image that is often portrayed in the media. Through Pantheon International, shareholders are getting access to a global, diversified portfolio of private companies which are managed by many of the leading private equity managers. Our managers and their in-house operational experts work closely with the management teams of their portfolio companies to help them create value over the long term. They can achieve this through a variety of ways such as implementing operational improvements, increasing their scale, expanding geographically and completing add-on acquisitions. 

“We back managers who are sector specialists, are well networked and can offer the complete package where their relationships, expertise and experience really come into play. We seek to avoid managers who have disproportionately benefitted from aggressive leverage strategies or simply a rising market as our focus is on managers that drive real growth in their portfolio companies.”

Alan Gauld, Managing Director and Lead Portfolio Manager of Patria Private Equity Trust, said: “Patria Private Equity is what some people term a ‘fund of funds’ strategy. We invest with 17 core private equity partners both via their funds and directly alongside them into private companies. As we are mid-market buyout focused, our partners take majority control of their portfolio companies and add genuine value to these businesses, which are often transitioning from being founder or family owned, or being carved out of a large corporate – so the potential to unlock value for our shareholders is very strong.”

Oliver Gardey, Co-Portfolio Manager at ICG Enterprise Trust, said: “Our approach is to partner with the right manager – those with strong track records, deep domain expertise and a focus on operational value creation. We partner with the likes of New Mountain Capital, Gridiron and TH Lee in the US, and PAI, CVC and Cinven in Europe. Whilst ICG Enterprise Trust is a minority investor, we work closely with these managers, with whom we share a similar investment strategy. Private equity has historical associations with financial engineering, but underlying earnings growth is increasingly important to value creation. That’s why we focus on profitable and cash-generative private companies. Our portfolio companies often record double-digit EBITDA growth – higher than the FTSE All Share EBITDA growth – which we believe demonstrates the power of our asset class.”

Why would investors invest in private equity? 

Alan Gauld, Managing Director and Lead Portfolio Manager of Patria Private Equity Trust, said: “I think everyone should have some PE in a diversified investment portfolio. The active ownership model of private equity investment is very different from traditional listed equities investment, allowing private equity investors to take majority control in a company and really delve under the bonnet so that they can identify all the ways the business can create further value. In my opinion, the best PE firms have a better toolkit these days to take full advantage of this unique investment model, working actively with portfolio company management to help the businesses succeed and grow more quickly.

“There are now over 30,000 companies owned by private equity investors across the globe – a huge pool of opportunity when you consider that public markets are currently dominated by around ten companies – and this number is increasing each year as businesses stay private for longer. For investors looking for growing, innovative, disruptive businesses of the future, the PE economy is where they will find them before they come to the public market.”

Colm Walsh, Co-Portfolio Manager at ICG Enterprise Trust, said: “The primary reason is private equity can generate attractive returns over the long term – it’s patient capital that can transform good companies into market leaders. The alignment of interests between investors and operators also drives better performance. 

“Secondly, private equity offers diversification. Public equities are doing well but are concentrated in one or two narrow themes. We believe we provide access to the broader ‘real’ economy – anything from theatre operators to pet food to food distributors! Large global investors such as sovereign wealth funds have been increasing their allocations to the asset class, which is a strong endorsement of private equity’s ability to provide diversification and long-term compounding growth within a portfolio.”

Charlotte Morris, Partner at Pantheon and Lead Manager of Pantheon International, said: “Private equity gives access to certain sectors and sizes of companies that are harder to access through public markets. Also, many companies are staying private for longer therefore a lot of the value creation takes place before they go public, with many choosing not to go public at all. 

“Finally, the best private equity managers who take a hands-on approach to managing their portfolio companies have the credentials to outperform the public markets in the years to come. We believe that these factors make private equity an attractive proposition and it should form part of a balanced investment portfolio.”