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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.

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Private Equity

Fundamentals of          private equity

Private equity (PE) involves investing in private companies or buying out public companies to improve and eventually sell them for profit. PE funds, raised from institutional investors and high-net-worth individuals, are used for strategies like leveraged buyouts, venture capital, and growth capital. The goal is to create value through operational improvements and financial restructuring, with investments typically held for 5 to 7 years before exiting through IPOs, sales, or recapitalizations.

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Private Equity

Benefits of investing in private equity

Investing in private equity offers several compelling benefits. It provides access to high-growth potential companies not available in public markets, often leading to superior returns. The active management and strategic guidance from experienced investors help enhance company performance and value. Additionally, private equity investments offer portfolio diversification, reducing overall risk by including assets that are less correlated with public market fluctuations. By tapping into private equity, investors can achieve significant capital appreciation and benefit from exclusive investment opportunities.

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.

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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.

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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.

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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.

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How does it work?

Indicative
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.

Learn more in our whitepaper