Building A Resilient Private Equity Portfolio

In a volatile market environment defined by geopolitical uncertainty, high interest rates and persistent inflation, IMCO's Private Equity team has developed a strategy built for resilience and long-term outperformance. Through sector specialization, long-term strategic partnerships and a commitment to responsible investing, IMCO is building a high-quality private equity portfolio diversified across sectors, geographies and transaction sizes, while focusing on long term enduring tailwinds and business models agnostic to broader macro-economic cycles.

In this Q&A, Anastasia Elia, Managing Director, Head of Private Equity, shares her insights into the strategy, recent achievements and IMCO's vision for creating lasting value.

How would you describe IMCO’s approach to Private Equity?

Our approach is grounded in fundamental, bottom-up investing. In practice, that means proactively sourcing and developing strong relationships with a set of strategic general partners (GPs) and leveraging these relationships to generate strong no fee, no carry co-investment deal flow which in turn helps us build a diversified portfolio of assets. To date, this approach has generated a high direct-to-fund ratio and strong returns (both absolute and relative to our benchmark).

We invest across a wide range of sectors selecting the best assets with the best owners. Our priority sectors are healthcare, technology and business services, where we are developing deeper sector specialization to proactively manage the investment portfolio.

The slow investment activity in 2024 is resulting in increased competition when assets do turn over. How does IMCO differentiate itself as an investor to seize opportunities when they arise?

Despite rising cost of capital in 2024, we continue to see elevated valuations for high quality private equity assets. We remain highly selective and differentiate ourselves against other allocators by being nimble and acting quickly on high quality opportunities.

Our co-investment program is a key advantage, allowing us to be flexible across various deal sizes and quickly deploy capital in high-quality opportunities. Additionally, we are patient, long-term capital providers, and can pursue more complex investments such take privates, carve outs and special situations that may take time to realize value. These differentiators help us achieve vintage year diversification, ultimately resulting in a more resilient portfolio.

Where is IMCO focused on searching for long-term investment opportunities?

We see strong, long-term opportunities in healthcare, technology and business services — sectors underpinned by attractive and non-cyclical long term growth drivers.

In each of these sectors, IMCO prioritizes companies that lead in their fields, have large addressable markets, delivering stable high cash flow conversion ratios and strong operating performance across macroeconomic cycles.

Tell us about any notable exits and the strategies IMCO took to achieve a successful outcome.

One of our most successful exits to date was our investment in VersaCold, alongside our partner TorQuest. Throughout our partnership, we identified key areas to enhance VersaCold's value, such as supporting the acquisition of strategically located real estate, strengthening the leadership team and streamlining operations to improve efficiencies and drive growth. These strategic moves, along with a very competitive sale process, positioned VersaCold as an attractive asset within the competitive logistics sector. Ultimately this led to a sale to Lineage Logistics, a global leader in cold storage, allowing VersaCold to continue its growth trajectory under new ownership. IMCO sold its stake for approximately three times its invested capital, and a 100%+ net IRR.

IMCO also recently completed our first large-scale secondaries sale, representing a selection of fund stakes across multiple managers. This strategic sale allowed us to optimize our portfolio by right sizing several fund exposures, and eliminating those no longer aligned with IMCO's strategy. The success of both the VersaCold exit and the secondaries sale reflect our commitment to thoughtful, value-driven exits that optimize our portfolio for long-term growth and resilience.

How is IMCO integrating ESG principles into its investment process and how do these considerations impact both short-term and long-term decision-making?

ESG is integrated into each investment decision we make at IMCO, from opportunity screening to due diligence and value creation. We work closely with our Sustainable Investing team to screen all opportunities against leading sustainability frameworks like the the Sustainable Accounting Standards Board (SASB) criteria and the UN’s Sustainable Development Goals (SDGs). In 2023 we have also started tracking the carbon footprint and diversity metrics of our direct investments and strategic partners and have seen a material improvement in the quality of the data this year. We expect these measurements to further improve over time as we continue to gather data and influence our GPs to integrate ESG priorities across the portfolio.

Last year, we joined Ownership Works as a founding investor partner – the first Canadian institutional asset manager to do so. Through this partnership, we are proud to help portfolio companies implement broad-based employee ownership programs, empowering workers with financial security and fostering an inclusive workplace culture. This approach ensures the benefits of value creation are shared among employees, which we believe enhances both resilience and long-term sustainability of our portfolio.

Looking ahead, what are your areas of focus for 2025?

An ongoing area of focus for me is the growth and development of our team. We will continue to invest time and resources to grow the skillset of our team, providing training and mentorship opportunities, as well as other hands-on learning opportunities in partnership with our GPs or industry organizations. We have built the strongest Private Equity team we’ve had since IMCO’s inception and I’m confident we will keep growing and learning, together.

The second area of focus is our co-investment program. It enables us to build a resilient and diversified direct portfolio while being a nimble and flexible partner to our GPs, who are often looking for a quick turnaround on transaction execution and certainty of close. Augmenting this program would allow us to prioritize the highest quality deals in the key sectors we are focused on, while being responsive to our GPs’ needs and timelines.

Learn more about IMCO Private Equity's approach to building portfolio resilience through sector specialization, long-term partnerships and responsible investing.