Private Equity

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.

Phase I

Sourcing of Investment Opportunities

Phase II

Evaluation of Investment Opportunities & Due Diligence

Phase III

Development of Investment Memorandum

Phase IV

Negotiation of Investment Terms

Phase V

Investment Approval

Phase VI

Monitoring of Investments

Phase VII

Exit from Investments

Hedge Fund
Venture Capitalist
Joining a Corporate / Portfolio company
Venture Capitalist
Secondary Funds, Fund of Funds
Trade sale / M&A
Private Equity: 2017 in Numbers
Fundraising
$453 bn

Aggregate capital raised by 921 private equity funds closed in 2017.

$2.83 tn

Private equity assets under management as at June 2017, an all time high.

AUM
Expectations
95%

of investors felt their private equity investments met or exceeded their expectations in 2017.

53%

of investors plan to increase their allocation to private equity over the longer term, a record proportion.

LP Appetite
Distributions
$233 bn

Total capital distributed in H1 2017, following the record $520bn distributed in 2016.

$182 bn

Aggregate value of 11,145 venture capital deals completed in 2017, an all-time high.

Venture Capital
Buyout
4,191

Number of private equity-backed buyout deals completed in 2017, for an aggregate $347bn.

88%

of investors consider valuations to be the greatest challenge facing the private equity industry in the year ahead.

LP Concerns