Xponance
Alts
Solutions

Strategic Minority Investments
in Emerging and Diverse Alternative Managers

XAlts acquires non-control, minority equity interests in the management companies of alternative asset managers—providing exposure to management fee economics, carried interest participation, and balance sheet appreciation. This approach differs from traditional LP fund commitments by investing in the GP’s business itself, offering differentiated return sources and earlier cash flow generation.

The firm targets lower middle market investments with a strategic focus on emerging, diverse and women-led firms across the GP lifecycle:

Diversity Mandate
Embedded in Investment Criteria

XAlts focuses on emerging and diverse managers:

This focus builds on Xponance’s 30+ year track record: through its Multi-Manager Platform, Xponance has placed assets in 190+ investment strategies, with over 60% offered by diverse or women-owned firms. Notably, 47% of Diverse and Woman Business Enterprise products funded by Xponance were not present in third-party databases prior to funding.

Generating Alpha Through
Identifying Market Inefficiency

Consistent with Xponance’s mission and track record of Transforming Access to Capital by investing in overlooked and underinvested investor, XAlts targets emerging and lower mid-market firms. According to Pitchbook, only 7.6% of firms below $4 billion sold a stake between January 2011 through June 2021. For GP staking, the return on our investments greatly depends on our ability to invest in talented GPs with whom we can partner to grow the value of their firm and sell our stake profitably. We believe the alpha opportunity in these market segments are driven by the following:

1. Value creation. Our value creation services (such as marketing, personnel, and fund structure advice), allow emerging and lower-mid market GPs to accelerate their growth and enhance the value of our GP stake.
2. More attractive entry valuations and lower leverage dependency. XAlts’ research indicates that lower middle market firms may benefit from structural advantages as interest rates remain elevated. The October 2025 publication “A Regime Shift in Private Equity Returns” found that average leverage multiples have historically been 50-100% higher for larger buyout companies compared to smaller peers—a factor contributing to compressed exits and impaired distributions as financing costs have risen.
3. More flexible exit options. Relative to large $10 billion plus GPs, emerging and lower-mid market have more flexible exits possibilities through management buy-backs, as well as strategic and financial buyers.
4. Diversity. Most diverse owned and led GPs are in the emerging and mid-market universe. Research by NAIC and others have shown that diverse private equity funds beat the Burgiss median across several key performance indicators: net IRR, net TVPI (total value to paid in capit), and DPI. Xponance has a 30+ year track record in building relationships and investing in diverse and emerging firms. Through its Multi-Manager Platform, Xponance has placed assets in 190+ investment strategies, with over 60% offered by diverse or women-owned firms. Notably, 47% of Diverse and Woman Business Enterprise products funded by Xponance were not present in third-party databases prior to funding.

Diversified
Asset Class Coverage

XAlts’ investment mandate spans the major alternative asset classes to provide an advantageous return stream which is diversified across management fees, carried interest, and terminal value for our LP investors. In addition to the strategies below, we diversify our stakes across vintage years and sectors.

Lower Middle Market
Focus in a Higher Rate Environment

XAlts’ research indicates that lower middle market firms may benefit from structural advantages as interest rates remain elevated. The October 2025 publication “A Regime Shift in Private Equity Returns” found that average leverage multiples have historically been 50-100% higher for larger buyout companies compared to smaller peers—a factor contributing to compressed exits and impaired distributions as financing costs have risen.

Small buyouts (sub-$1 billion companies) have consistently enjoyed more attractive valuations and lower leverage dependency, suggesting potential resilience. XAlts’ Investment Team concluded:

“We feel that allocators may be better served by focusing their private equity investments much further down the size spectrum than they have before.”

Institutional Partnership
with Investcorp Strategic Capital Group

In April 2021, XAlts announced a strategic collaboration with Investcorp’s Strategic Capital Group (SCG)—part of Investcorp, a leading global alternative investment manager with approximately $80+ billion in assets under management. This partnership combines Xponance’s specialized emerging and diverse manager sourcing with SCG’s institutional GP capital capabilities.

SCG’s leadership participates on the XAlts Investment Committee, providing institutional rigor while expanding access to mid-market opportunities.