Private equity investments offer high returns in exchange for taking a certain level of risk. These risks result first and foremost in considerable return dispersion and sometimes, despite the long-term investment horizon, in exits in less favourable conditions than anticipated by investors. Private companies can also go bankrupt, but they are more likely to do so in certain segments of the private market. Stratifying the PE universe using the PECCS taxonomy, a range of risk/return profiles appears that suggest a wide range of risk-taking and return-seeking strategies.

In this article, Scientific Infra & Private Assets examines the Manufacturing and Natural Resources market segments, showing that the Natural Resource companies have had more volatile revenues and profitability over the past 10 years, leading to more volatile valuations and returns as compared to Manufacturing companies across all historical time periods.

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