Elizabeth Weymouth on Grafine Partners' Strategy for 2026 Private Equity

Grafine Partners' Investment Thesis

• 💡 Grafine Partners invests in emerging private equity managers, identifying a market white space occupied by smaller, sector-focused firms.
• 🎯 These firms often focus on middle and lower-middle market deals, aiming for 3x or better returns by creating value where larger firms do not.
• 🚀 The strategy is an antidote to the contracting returns seen in mega-funds, which have averaged around 1.3x multiple and 14% IRR over the last decade.

Opportunities in the Middle Market

• 🔍 The middle and lower-middle markets are underrepresented by investors, presenting opportunities for low-hanging fruit in value creation.
• 🤖 The incorporation of AI and other tools is less prevalent in these markets, offering a competitive advantage for managers.
• 🤝 Managers leverage established networks with CEOs and management teams to source unique, non-overbanked deal flow.

Key Sectors for 2026 Outlook

• 🏭 Opportunities are identified in the industrial space, manufacturing, and infrastructure services.
• 🛍️ Branded consumer sectors are also considered highly interesting.
• 🏥 Healthcare services currently represent about 20% of Grafine's portfolio.

The Rise of First-Time Funds

• 📈 A significant trend is the emergence of new firms launched by seasoned dealmakers with 15-20 years of senior experience.
• 💰 Despite their expertise, these first-time funds face a challenging fundraising market, making Grafine's capital provision crucial.
• ✅ First-time funds have historically outperformed later-stage funds across various vintage years over the past 25 years.