Realise The Power of Private Equity and Alternative Investment

PRIVATE EQUITY EXPLAINED

A private equity firm’s foundation is based on acquiring a company at one price and selling it at a point in time for a significantly higher value. PE offers an alternative investment for those seeking an absolute return.

Here, we explain how a fund is formed and how the cycle of the process, with the purpose of generating substantial growth, evolves:

It begins when the PE fund is established and undergoes a capital raise, tapping into a network which might typically consist of institutional investors, pension funds and high net worth individuals (HNWIs) to obtain commitment to invest. They will have a target of, for example, £100million and will endeavour to secure commitment up to and sometimes in excess of that target. The money is not sat upon. There will be legal agreements permitting the PE fund to invest within the parameters stated – size of company, industry sector - during the process of generating the funds. The fund is typically held for 10 years, encompassing a period of raising the funds, going to market to find acquisition opportunities, making the investments, typically holding those for around three to five years, and then divesting them.

IN 2023, GLOBAL HNWI WEALTH EXPANDED BY

4.7%

Source: CapGemini

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