Sri Lanka’s Capital Stack Is Being Built — Listed Securities First, Venture Capital Next
The first European-regulated fund is live. What comes next will define whether the recovery becomes an ecosystem.
Saint Clair Market Intelligence | February 2026
ACP Asset Management has launched the Sri Lanka Opportunity Fund, the first European-regulated UCITS vehicle dedicated entirely to Sri Lankan assets. Seeded with $10 million and expecting a further $25 million within 30 days, the fund targets $100 million in AUM within six to twelve months. The launch establishes the listed-securities layer of Sri Lanka’s international capital stack — and raises the question of when venture capital and private equity will follow.
A Fund With Institutional Weight
On 25 February, ACP Asset Management and its investment manager ACP Corum launched the Sri Lanka Opportunity Fund in Colombo. The fund is regulated by the Financial Markets Authority of Liechtenstein and structured as a UCITS vehicle — the European regulatory standard that ensures daily liquidity, transparent reporting, and institutional-grade investor protection.
The numbers signal serious intent. The fund was seeded with $10 million. A further $25 million inflow is expected within 30 days. The stated ambition is $100 million in AUM within six to twelve months. A delegation of professional and institutional investors from German-speaking Europe — representing over $10 billion in AUM and $30 billion in assets under administration — attended the launch in Colombo.
This is not a speculative proposition. ACP Corum’s earlier Sri Lanka strategy delivered USD returns of 38.50% in 2023, 48.55% in 2024, and 25.60% in 2025 — a cumulative 77.55% since inception in December 2021, substantially outperforming the MSCI Frontier Markets Index across every period.
The Macro Beneath the Numbers
Sri Lanka’s post-restructuring trajectory provides the foundation. A more stable government debt profile, renewed fiscal and regulatory discipline, and reforms across state-owned enterprises, taxation, and energy pricing have restored a measure of macroeconomic credibility. Tourism and export-oriented manufacturing are recovering. India connectivity is strengthening.
Equity valuations on the Colombo Stock Exchange sit at approximately 11x price-to-earnings — among the lowest in Asia. For international investors accustomed to paying 20x or more in established Asian markets, this represents a rare entry point backed by improving fundamentals rather than momentum.
Yet compelling macro alone has never been sufficient to move institutional capital into frontier markets. What moves capital is structure.
How Capital Stacks Are Built
Every frontier market that has successfully attracted sustained international investment has followed a recognisable sequence. Listed securities come first. They are liquid, regulated, and familiar to institutional allocators. The UCITS wrapper — or its equivalent — provides the governance architecture that European and international institutions require before they will allocate.
Once the listed layer is established, the capital stack deepens. Private equity follows, targeting growth-stage companies that have outgrown venture funding but are not yet listed. Then venture capital reaches the earliest-stage opportunities — the highest-risk, highest-potential layer of the stack.
The sequence matters because each layer creates the conditions for the next. Listed-securities vehicles establish regulatory precedent, build investor familiarity, and develop the operational infrastructure — custodians, administrators, legal frameworks — that subsequent layers require.
The Sri Lanka Opportunity Fund is establishing the first layer.
The Layer That Does Not Yet Exist
Sri Lanka’s startup ecosystem is nascent but growing. The country produces strong technical talent, benefits from geographical and cultural proximity to India’s booming technology economy, and operates on a cost base that remains competitive even by South Asian standards.
Yet there is, at present, no European-regulated vehicle through which international investors can access Sri Lankan venture capital or private equity with institutional-grade governance. The asset class remains largely invisible to allocators outside the region.
The gap is structural, not accidental. Building a cross-border VC or PE vehicle for a frontier market requires more than a fund wrapper. It requires the corporate architecture to bridge regulatory jurisdictions, the governance frameworks to satisfy international LPs, and the on-the-ground relationships to source and support portfolio companies. It requires, in other words, precisely the kind of capital diplomacy that listed-securities vehicles make possible but cannot themselves deliver.
Cross-border specialists with experience structuring European-regulated vehicles for frontier Asian markets are already laying the groundwork for this next layer.
The listed layer is now being laid. The next layer — venture capital and private equity — will determine whether Sri Lanka’s recovery translates into a durable investment ecosystem or remains a cyclical trade in listed equities.
The capital stack is being built. The question is who builds the next floor.
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Disclaimer: This article is for informational purposes only and does not constitute investment advice or an offer to invest in any fund or vehicle. Saint Clair does not provide investment recommendations. All decisions should be made based on independent research and consultation with qualified advisors.
About Saint Clair – Advisory & Capital: Saint Clair practises Capital Diplomacy — fostering cross-border investment relationships between Europe and Asia through trust, insight, and strategic facilitation. Saint Clair Asia partners with overlooked Asian innovation ecosystems where emerging opportunities and quality talent intersect. We bridge portfolio companies to European markets, partners, and acquirers. Since 2016, we have specialised in the Europe-Asia investment corridor.
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