Private Equity

Private equity is a type of alternative investment or security that isn't traded on a public exchange. Private equity funds and investors invest directly in private companies through an Issuer.  

An ‘alternative investment’ is a financial asset that does not fall into one of the three traditional investment categories: stocks, bonds and cash equivalents. Traditional investments include stocks, bonds, and cash that are publicly traded. The traditional method of investing is through public markets, also known as stock exchanges, where corporations sell shares to the general public.

The private capital market is a viable alternative to more traditional means of capital financing. These companies are traditionally more real estate-focused but are also cash flow generating businesses that want to buy more properties, other businesses and build their business. 

Previously, the private equity market was regarded as difficult to navigate and only for Pension Plans and the ultra-high net worth, but today, the appeal of private equity is appealing to qualified firms and investors alike and gives everyone the chance to participate and invest like pension funds and high net worth individuals do.

The goal of private equity investments is to provide value to private companies by funding growth, operational improvements, acquisitions or other changes. These improvements, when combined with active ownership, longer time horizons, and financial leverage, may result in larger returns than are typical in public equities and often with much less volatility.

They have a set investment horizon, usually between three to five years, after which the private equity firm aims to profitably exit the venture. initial Public Offerings (IPOs) and the sale of the company to another private equity group or a strategic bidder are examples of exit options and in some cases the Fund will just continue to grow and provide favorable returns to Investors.

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