A Deep Dive by Apolonia Capital
Over the past decade, Sovereign Wealth Funds (SWFs) have emerged as some of the most influential players in global private markets. With an estimated $11 trillion in assets under management globally, many SWFs are increasingly shifting from passive fund allocations toward direct and co-investment strategies.
In this landscape, co-investment is not just a capital allocation tool, it’s a relationship-based, strategic partnership model. But for SWFs, choosing the right co-investment partner is a decision that goes beyond financial returns. It involves careful evaluation across several dimensions of institutional readiness, operational integrity, and long-term strategic fit.
At Apolonia Capital, we engage regularly with institutional investors, including sovereign capital allocators, and understand how they assess co-investment opportunities. Here, we explore the 6core criteria that inform their partner selection process.
1. Institutional Track Record and Executional Rigor
SWFs favor partners with demonstrable success, not only in terms of returns but also in the structure and sustainability of value creation. Key questions they ask include:
- Has the partner led or co-led deals of meaningful scale and complexity?
- Are there multiple full-cycle exits that showcase their ability to create and realize value?
- Is the partner consistent across geographies, sectors, and economic cycles?
It’s not uncommon for SWFs to request data rooms with historical deal memos, investment committee notes, and post-acquisition performance tracking. They look for a rigorous investment process—not opportunistic deal-making.
At Apolonia Capital, our disciplined focus on mid-market transactions allows us to bring a refined, repeatable playbook to every opportunity, backed by real-world deal experience.
2. Thematic and Sectoral Strategic Fit
Sovereign investors often have long-term mandates tied to national economic priorities or macroeconomic hedging strategies. Co-investment partners must demonstrate sectoral alignment and the ability to add differentiated insight within that niche.
For example, an SWF with a mandate to increase exposure to food security, energy transition, or digitization may favor partners who bring proprietary sourcing, domain expertise, and operational networks in those fields.
This is why Apolonia Capital maintains a deliberate focus on high-growth, defensible verticals, such as healthcare services, software-enabled B2B platforms, and industrial tech, where we can offer more than capital: we offer clarity, foresight, and insight.
3. Operational Value Creation Capabilities
While traditional fund managers have leaned heavily on financial engineering, SWFs increasingly emphasize operational alpha, the ability to drive sustainable EBITDA growth through improvements in leadership, systems, go-to-market strategy, and margin expansion.
They ask:
- Does the co-investor have a proven value creation framework?
- Do they actively partner with management teams post-acquisition?
- Can they demonstrate operational uplift across their portfolio?
At Apolonia, we bring hands-on engagement post-close, whether that means digitization initiatives, strategic hiring, or bolt-on M&A to accelerate growth. Our value creation team is fully embedded in the investment lifecycle, not just during due diligence.
4. Governance, Alignment, and Fiduciary Standards
As public asset custodians, SWFs demand the highest levels of governance, transparency, and accountability. Co-investment partnerships must mirror institutional-grade standards in:
- ESG integration and reporting
- Anti-corruption and compliance controls
- Conflict-of-interest management
- Decision-making and escalation rights
In short, SWFs want assurance that their capital is being managed with integrity and transparency. Apolonia Capital is structured for institutional co-investment. We offer SWFs full visibility into our investment and operational frameworks and tailor governance protocols to meet our partners’ compliance mandates.
5. Capital Commitment and Risk Sharing
Unlike fund investments, co-investments lack a diversified structure. SWFs expect their partners to have skin in the game, committing meaningful capital to signal alignment of interests. They scrutinize:
- The percentage of the deal funded by the partner
- Whether principals are personally invested
- The distribution waterfall structure and fee alignment
At Apolonia, we believe alignment is foundational. We invest our own capital alongside our institutional partners, sharing in both upside and downside. Our co-investment structures are transparent, equitable, and tailored for true partnership.
6. Cultural Fit and Long-Term Relationship Potential
Finally, SWFs view co-investment as a relationship, not a transaction. They evaluate the “soft” dimensions that often determine the success of a multi-year partnership:
- Are communications clear, consistent, and timely?
- Is there mutual respect and a shared worldview on risk, return, and stewardship?
- Do decision-makers engage directly and collaboratively?
Apolonia Capital prioritizes strategic alignment and cultural compatibility with our institutional partners. We aim to build decade-long relationships grounded in trust, responsiveness, and shared success.
Final Thoughts
Sovereign Wealth Funds are not just providers of capital—they are sophisticated allocators with sovereign-scale mandates and a clear long-term outlook. To become a trusted co-investment partner, firms must demonstrate more than just a strong pipeline. They must bring strategic clarity, institutional depth, operational strength, and values alignment.
At Apolonia Capital, we’re built for this kind of partnership. With a focused strategy, hands-on execution, and a long-term mindset, we stand ready to help sovereign institutions deploy capital wisely, and build lasting value together.
Let’s talk partnership.
Visit www.apoloniacapital.com or contact our Institutional Partnerships team to start the conversation.
