Tioopo Capital Founders’ Letter: 2025 Challenges & Opportunities (Jan 26)
As 2025 draws to a close, we're thrilled to share Tioopo Capital's first Founders’ Letter, offering insights into the evolving private equity landscape in the UK and France.
Key Takeaways:
• The era of multiple-driven returns is over. Higher capital costs and structural uncertainty mean private equity performance will now be driven primarily by earnings growth and cash generation.
• Valuation discipline has become the primary source of downside protection. Acquiring businesses at 5–7x EBITDA implies 15–20% entry cash yields, enabling capital recovery through operations rather than relying on exit conditions.
• Liquidity constraints are reshaping the industry. With distributions down over 40% since 2021, the rise of continuation funds increasingly reflects delayed exits rather than new value creation.
• Operational capability is now the decisive differentiator. Investors able to actively improve businesses — including through AI-driven productivity gains — will outperform in a market defined by dispersion rather than expansion.
📄 Full letter and insights attached.