Private equity is a source of investment capital from clients (“limited clients” or LPs), normally made up of accredited investors, pension funds, funds of funds, sovereign funds, banks, corporates, government agencies, which is used in buying assets and then sell them on. General partners (or GPs) at a private equity firm manage these monies to yield favourable returns for their clients, typically with an investment period that spans around four to fifteen years, depending on the aggressiveness of the firm.
Here, assets can be a range of anything, be it whole companies, power plants, hotels, condominium blocks etc.– literally anything that can make a return. The real key is the element of control over the asset. With control over the asset, the private equity firm can be actively involved in transforming and restructuring the asset, making it more profitable, valuable or even, effective.
Private equity firms will normally look into target firms that are struggling or undervalued – in other words, potential for growth. The target firm is acquired, and changes are made to how the company operates. With successful implementation, the acquired company improves, and the private equity firm can then execute their exit strategy to recoup their investment.
Sourcing of Investment Opportunities
Evaluation of Investment Opportunities & Due Diligence
Development of Investment Memorandum
Negotiation of Investment Terms
Monitoring of Investments
Exit from Investments
Aggregate capital raised by 921 private equity funds closed in 2017.
Private equity assets under management as at June 2017, an all time high.
of investors felt their private equity investments met or exceeded their expectations in 2017.
of investors plan to increase their allocation to private equity over the longer term, a record proportion.
Total capital distributed in H1 2017, following the record $520bn distributed in 2016.
Aggregate value of 11,145 venture capital deals completed in 2017, an all-time high.
Number of private equity-backed buyout deals completed in 2017, for an aggregate $347bn.
of investors consider valuations to be the greatest challenge facing the private equity industry in the year ahead.