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Opportunity

Why private equity?

Private equity offers access to non-public companies, emerging markets and innovative industries, providing opportunities for long-term growth. By investing across various stages of a company’s lifecycle, investors can tailor their portfolios to capitalise on specific growth trends and unique market opportunities, potentially enhancing overall portfolio performance and achieving higher returns.

The alternative investments mentioned in this website may not be available to retail investors in Hong Kong.

Why Franklin Templeton for private equity investing?

With a proven track record and extensive reach across diverse markets, Franklin Templeton offers a wealth of expertise and opportunities in private equity. We can support you to navigate the complexities of the private equity landscape, ensuring you can make the most of your investments.

US$83 bn

Private equity assets under management

20+

Years investing in private equity

16

Global locations

Data as of 30/06/2025.

A range of opportunities across stages of development

Private equity offers a wide range of opportunities across different stages of a company’s development from early-stage to mature buyouts. By diversifying private equity investments across these stages, you can tailor your portfolio to capture specific growth trends and market dynamics. This approach may help manage risk while maximising the potential for high returns.

Least mature 

Venture capital

Growth equity

Most mature

Buyout

Risk

Highest

Lowest

Stage 1

Venture capital

Represents investments in early-stage companies with an idea for a new product or service. Private equity firms are essential partners in turning innovative ideas into viable, high-growth businesses.

Acting in a mentorship capacity.

Utilising their network.

Taking board seats.

Assisting with technology development.

Stage 2

Growth equity

Focus on established companies with a proven business model that are fast-growing. Private equity firms provide capital, offering both financial resources and strategic guidance.

Executing strategic growth initiatives.

Making strategic acquisitions.

Taking board seats without taking control of company or having heavy involvement.

Stage 3

Buyouts

Buyouts are the largest, most mature single strategy in all private markets and constitute a spectrum of transactions varying in leverage, size and strategies. The private equity firm plays a crucial and active role in acquiring and transforming established companies.

Leveraged Buyout (LBO)-Based on financial engineering

  • Portfolio companies with steady cash flows can support larger amounts of debt
  • Corporate tax advantages
  • Operational benefits

Equity Buyout-Generating higher potential profits from growth, expansion or transformation.

  • Expanding distribution and product lines
  • Improving processes
  • Creating synergies with the PE fund’s other portfolio companies

The appeal of private equity

The appeal of private equity investing lies in its long-term approach to capitalising new businesses, developing innovative business models and restructuring distressed businesses. Due to its lower correlation* to public equity funds, they are a desirable diversifier in investment portfolios.

Strategy execution

Private equity firms excel at executing strategic plans that drive growth and profitability. By leveraging their expertise in operational improvements, market expansion and cost management, they can significantly enhance a company’s value.

Value creation

Private equity firms focus on active management. This can include restructuring operations, optimising capital structures or making strategic acquisitions, all aimed at increasing the overall enterprise value.

Availability of capital

Private equity provides companies with substantial capital that might not be available through traditional financing channels. This capital injection supports growth initiatives, innovation and scaling, ultimately leading to higher potential returns for investors.

*Correlation is a statistic that measures the degree to which two securities move in relation to each other.

Private equity secondaries

Private equity secondaries are a rapidly growing segment of the broader private equity market and an important source of liquidity for investors. Investors in secondaries are purchasing primary interests from large institutional investors like pensions funds and foundations and endowments when they need liquidity for rebalancing or strategic initiatives, often at attractive pricing.

Growing Market

The secondaries market has grown more than 3x since 2016, and as primary commitments rise, there could be room for even more growth within the secondaries market.

Annual Secondary Market Volume ($B)

Growing market graph

Source: Jeffries Global Secondary Market Review. As of January 2025.

Mitigate the J-curve**

Unlike primary funds, secondary funds buy interests in funds that have mostly completed their investment periods, containing portfolio companies that are already generating cash flow.

As a result, secondary funds typically return investor capital sooner because they purchase stakes at later stages in the private equity lifecycle.

J-Curve graph

For illustration purposes only.

Ability to buy proven assets

By purchasing interests in private investment funds when most or all of their capital has been invested, secondary funds reduce the blind pool risk* associated with primary fund investing.

Assets graph

Why secondaries?

Private equity secondaries are a rapidly growing segment of the private equity market and may provide an important source of liquidity for investors. In secondary investments, you purchase interests from large institutional investors, such as pension funds, foundations and endowments, when they need liquidity for rebalancing or strategic initiatives. These opportunities often come at compelling prices.

Abstract graphic

Broad diversification

Diversified portfolios by sponsor, fund, sector, strategy, geography, industry, company and vintage year, which can potentially dampen volatility 

Abstract graphic

Potential for earlier cash returns

By acquiring interests in established private investment funds, secondary funds generally receive earlier and more frequent distributions than a traditional primary fund 

Abstract graphic

Reduced investment risk*

By purchasing interests in private investment funds when most or all of their capital has been invested, the blind pool risk associated with primary fund investing is reduced 

Abstract graphic

Mitigation of primary J-curve**

By purchasing assets closer to their harvest stage and at a discount, investors can mitigate the J-curve effect associated with primary fund investing 

Our knowledge hub

Insight

Private equity secondaries: A primary allocation in an evergreen private equity portfolio

Private equity is at a turning point, with investors and advisors exploring the best ways to allocate across sub-strategies. There is a compelling case for private equity secondaries serving as the cornerstone of a core/satellite evergreen model.

Read now
Insight

Private Markets Insights: Not a simple open and closed case

Evergreen and closed-ended / drawdown funds offer different paths to private markets - understanding their strengths can help investors optimise allocations.

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Insight

What do tariffs mean for commercial real estate and CRE debt?

Benefit Street Partners believes that although stock market volatility is unsettling, it is not a cause for concern in the CRE sector. Instead, we should expect increased demand for CRE debt investments over the coming months and quarters.

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Insight

Unlocking opportunities: Understanding the growing secondary market

The global secondary market has grown over the past three decades primarily because of the increased supply of capital committed to private investment funds, according to Lexington Partners. They believe the backdrop for the secondary market continues to remain attractive.

Read now
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About Lexington Partners

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About Franklin Venture Partners

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Why Franklin Templeton for alternative investing?

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Why Franklin Templeton for alternative investing?

Glossary

Private equity:

funds typically invest in equity capital that is not publicly available. Instead, the funds take direct ownership in private companies. Private Equity has the potential to provide above-market returns, with greater control, reduced liquidity and greater diversification, than traditional public markets.

Venture capital:

is a form of private equity that investors provide to start-up companies and small business that exhibit high growth potential.

Correlation:

is a statistical measure of the relationship between two sets of data. When asset prices move together, they are described as positively correlated; when they move opposite to each other, the correlation is described as negative or inverse. If price movements have no relationship to each other, they are described as uncorrelated.

Diversification:

is a risk management strategy that mixes a wide variety of investments within a portfolio. A diversified portfolio contains a mix of distinct asset types and investment vehicles in an attempt at limiting exposure to any single asset or risk.

Investment risk

Private equity investments involve a high degree of risk and are suitable only for investors who can afford to risk the loss of all or substantially all of such investment. Private equity investments and vehicles that invest in them should be considered illiquid and their performance may be volatile. There can be no assurance that any investment will be adequately compensated for risks taken.

*Blind pool risk is derived from investors in a new (“primary”) private equity vintage that are investing in a relatively blind pool of assets. Secondary investors help eliminate this by investing in identifiable assets.

**The “J-curve” is the term commonly used to describe the trajectory of a private equity fund’s cashflows and returns. An important liquidity implication of the J-curve is the need for investors to manage their own liquidity to ensure they can meet capital calls on the front-end of the J-curve.

Important information

This document is intended to be of general interest only. This document should not be construed as individual investment advice or offer or solicitation to buy, sell or hold any shares of fund or security. The information provided for any individual security mentioned is not a sufficient basis upon which to make an investment decision. Investment involves risks. Value of investments may go up as well as down and past performance is not an indicator or a guarantee of future performance. The investment returns are calculated on NAV to NAV basis, taking into account of reinvestments and capital gain or loss. The investment returns are denominated in stated currency, which may be a foreign currency other than USD and HKD (“other foreign currency”). US/HK dollar-based investors are therefore exposed to fluctuations in the US/HK dollar / other foreign currency exchange rate. Please refer to the offering documents for further details, including the risk factors.

The data, comments, opinions, estimates and other information contained herein may be subject to change without notice. There is no guarantee that an investment product will meet its objective and any forecasts expressed will be realized. Performance may also be affected by currency fluctuations. Reduced liquidity may have a negative impact on the price of the assets. Currency fluctuations may affect the value of overseas investments. Where an investment product invests in emerging markets, the risks can be greater than in developed markets. Where an investment product invests in derivative instruments, this entails specific risks that may increase the risk profile of the investment product. Where an investment product invests in a specific sector or geographical area, the returns may be more volatile than a more diversified investment product. Franklin Templeton accepts no liability whatsoever for any direct or indirect consequential loss arising from use of this document or any comment, opinion or estimate herein. This document may not be reproduced, distributed or published without prior written permission from Franklin Templeton.

Any share class with “(Hedged)” in its name will attempt to hedge the currency risk between the base currency of the Fund and the currency of the share class, although there can be no guarantee that it will be successful in doing so. In some cases, investors may be subject to additional risks.

Please contact your financial advisor if you are in doubt of any information contained herein.

For UCITS funds only: In addition, a summary of investor rights is available from here. The summary is available in English and Chinese.

The fund(s)/ sub-fund(s) are notified for marketing in various regions under the UCITS Directive. The fund(s)/ sub-fund(s) can terminate such notifications for any share class and/or sub-fund at any time by using the process contained in Article 93a of the UCITS Directive.

For the avoidance of doubt, if you make a decision to invest, you will be buying units/shares in the fund(s)/ sub-fund(s) and will not be investing directly in the underlying assets of the fund(s)/ sub-fund(s).

For AIFMD funds only: The Franklin Floating Rate Fund PLC (the Fund) is an investment company with variable capital incorporated in Ireland on 1 December 1999 as a public limited company under registration number 316174. The Fund is authorised by the Central Bank of Ireland as a designated investment company pursuant to to Section 1395 of Part 24 of the Companies Act 2014. The Fund's registered office is Capital Dock, Sir John Rogerson's Quay, Dublin Ireland.

In addition, a summary of investor rights is available from here. The summary is available in English and Chinese.

The fund(s)/ sub-fund(s) are notified for marketing in various regions under the AIFMD Directive. The fund(s)/ sub-fund(s) can terminate such notifications for any share class and/or sub-fund at any time by using the process contained in Article 32a of the AIFMD Directive.

For the avoidance of doubt, if you make a decision to invest, you will be buying units/shares in the fund(s)/ sub-fund(s) and will not be investing directly in the underlying assets of the fund(s)/ sub-fund(s).

Copyright © 2025. Franklin Templeton. All rights reserved.

This document is issued by Franklin Templeton Investments (Asia) Limited and has not been reviewed by the Securities and Futures Commission of Hong Kong.

Unless stated otherwise, all information is as of the date stated above. Source: Franklin Templeton.