Private equity (PE) involves investments made in privately held companies or in taking public companies private. These funds typically raise capital from institutional investors and high-net-worth individuals, with the goal of improving the operations of the companies in which they invest, increasing their value, and eventually exiting the investment through a sale, merger, or public offering. Private equity investments are long-term and illiquid, and they usually require a hands-on approach to add value to the portfolio companies.
An investment theatre where capital sidesteps public markets to buy, nurture, and eventually divest entire companies or significant stakes. Funds organise into limited partnerships with finite life spans, spending the early years calling commitments to finance leveraged buyouts, growth rounds, carve-outs, or turnarounds. Operational playbooks range from digital transformation and supply-chain overhaul to bolt-on acquisitions that bulk enterprise value before the exit curtain.
Illiquidity locks investors for seven to ten years, rewarding the patience with complexity and leverage premia—provided managers steer cash flows through covenants, rate cycles, and shifting sector multiples. Returns arrive through trade sales, IPOs, dividend recapitalisations, or secondary buyouts, then cascade down a distribution waterfall that feeds preferred returns before carried interest unlocks.
