Private Equity

What is private equity?

Private equity involves investing in private, non-publicly traded companies. Private equity firms raise funds from investors to acquire ownership stakes in these companies. They actively manage and improve the performance of the companies in their portfolio before eventually selling them to realize returns. Private equity can take different forms, such as buyouts, venture capital, and growth capital. This investment approach is known for its hands-on management and longer investment horizon, offering the potential for high returns. Watch the video or download our whitepaper to find out more.

How does it work?

How does a private equity fund work?

Private equity funds raise money from investors and use it to invest in private companies. They seek out opportunities, conduct due diligence, acquire stakes in companies, and actively work to enhance their performance. The goal is to exit these investments within a few years, realizing returns through strategies like selling the company or going public. The invested capital and realized gains are then distributed to the investors. The process involves a longer investment horizon and limited liquidity compared to traditional investments but typically offers a higher expected return.

Why Fund of Funds?

The advantages of a Fund of Funds

A private equity fund of funds (FoF) is an investment vehicle that invests in multiple private equity funds. Typically, these top-quartile funds are only accessible by high-net-worth individuals, banks and pension funds. By pooling capital, a FoF provides its investors diversification, access to expert management and risk mitigation by spreading investment across multiple underlying funds, geographies and strategies. In short, FoFs offer a practical and more hands-off approach to build exposure to a curated selection of private equity fund investments.

Why co-investments?

The importance of co-investments

Private equity co-investments are direct investments alongside a private equity fund in one of their underlying portfolio companies. This allows an investor to double down on high-conviction opportunities identified by the private equity fund and emphasize certain geographies or industries to create and maintain a balanced portfolio. A FoF is typically granted these opportunities on a no-fee-no-carry basis, amplifying its returns.

Source: Bain Global Private Equity Report

What’s in it for you?

Private equity typically outperforms the stock market

Private equity has proven to realize returns that far exceed those of alternatives such as stock market shares, real estate or saving accounts. For our fund and co-investment strategy, a yearly double-digit return after deduction of costs is expected.

How does it work?

cashflow profile

During the investment period, the FoF allocates capital to various private equity fund and co-investments, resulting in cash outflows in the following years. As underlying funds exit investments, the FoF receives returns and distributes these to its own investors. The cashflow timeline spans several years, influenced by the performance of underlying funds and market conditions.