The environment could hardly be more favorable: political stability, a strong financial sector, and an investor-friendly framework are what define Switzerland as a financial center, says David Arcauz, CFA and Managing Partner at Flexstone. Private equity and private debt no longer raise eyebrows and enjoy nearly ideal conditions.

Even so, the investment professional is still hoping for stronger momentum.

Switzerland a Challenge for New Market Entrants

Institutional investors remain hesitant when it comes to private equity. «Swiss pension funds allocate on average only between 2.1 and 2.7 percent of their assets to Private Equity. This is significantly less than in markets such as the UK, where the share is around 6 percent. There is a lack of local capital to finance, for example, the growth of promising local companies. International funds and investors dominate the market,» Arcauz notes.

He also sees regulatory hurdles: «The Financial Institutions Act (FinIA) and the Financial Services Act (FinSA) impose reulatory requirements on fund managers, which can be particularly challenging for new market entrants,» In addition, limited exit options, such as weak IPO activity on SIX, may restrict liquidity for private equity investors.

Flexstone Sees Positive Swiss Momentum

Nevertheless, Flexstone Partners has a high regard for the Swiss market. «We are witnessing a change. There has recently been a positive development,» Arcauz says. Particularly attractive sectors include IT, healthcare, and business service, alongside growing opportunities in the secondary market, especially given global liquidity constraints and valuation discounts. «Switzerland's best days in private markets are still ahead,» he emphasizes.  

Flexstone Partners, a wealth manager specializing in private equity and alternative investments, pursues a clear mid-market strategy in the current environment. With more than 25 years of experience, the firm focuses on growth and buyout investments in companies with enterprise values between EUR 50 and 500 million, as well as funds with volumes ranging from EUR 100 million to EUR 2 billion.

Conservative Leverage Approach

At the core of its strategy are diversification across regions and sectors, and a conservative use of leverage. In addition to primary investments, Flexstone increasingly emphasizes secondary and co-investments, which now account for up to 40 percent of portfolios.

European small- and mid-market companies make up as much as 50 percent of global portfolios, with a focus on IT, healthcare, business services, and fintech. Over the long term, Flexstone sees growth potential in the secondary market as well as in ESG and impact investments..