An asset class that consists of equity investments in privately- or closely-held companies. This type of investment is generally meant to reshape malfunctioning or “tired” companies into more productive organizations. Furthermore, it helps finance the brightest business ideas so that they may turn into active products and services. Private equity investments create value for both investors and the employees of the targeted companies. There are three primary sources for private equity investments: angel investors, venture capitalists, and private equity firms. Other types of such investments are buyouts, mezzanine financing, private investments in public equity (PIPE), and fund of funds (FoF) investments.
Private equity (PE) companies form and manage PE funds which are mostly private investment vehicles that allow investors to pool their capital for investment, whereby increasing their purchasing power in the marketplace.
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