|
|
advantage business consultancy pte ltd |
|
…we help companies with funding & business facilitation |
|
|
Looking to Invest in a Private Equity Fund? What is
Private Equity? Private Equity
refers a form of investment whereby money is invested in companies that are
not traded on a public stock exchange (i.e. private companies). Unlike investment in
publicly traded stocks, whereby the investor sells his shares in a Stock
Exchange and makes a return on his investment, Private Equity Funds receive a
return on their investments through ·
Selling out the investment during the
Initial Public Offering (IPO) of the investee companies ·
Selling the equity stake to another
company who wants to acquire its shares Why do
people invest in Private Equity? The main reason
for investing in Private Equity is to improve the risk and reward
characteristics of an investment portfolio. Long-term
historical out-performance Historical records
show that private equity outperforms listed equities over the long term. This
has been proven to be true in the US and Europe resulting in an increase in
the number of private equity funds over the last decade. Access to more
information A greater amount
of information is generally available to private equity managers. This helps
potential investors to more accurately assess the potential of the company.
The greater amount of information also reduces the risk of the unknown. Influence
over management decisions Private equity
investors usually seek some management participation in a company's strategic
direction and other key decisions. As a result, there may be less “surprises”
that may occur in the case of investing in a public company and knowing about
corporate only through press releases. What are
the negatives of investing in Private Equity? Less
liquidity While there are
advantages in investing in Private Equity, it is also a less liquid form of
investments than investing in public listed companies which can be bought and
sold easily. Private Equity investments are for investors with longer
investment horizon as it may take a while for the investors to exit the
investment via IPO, etc. Less
diversification A Private Equity
Fund typically invests in fewer companies than a Unit Trust that invests in
public equities. This may be seen as a good thing by some investors who
advocate having a more focused portfolio. Others may prefer to have more
invested companies in their portfolio to spread out the risk. What is a
Private Equity Fund? A Private Equity
Fund is a collective investment scheme whereby investors pull together their
monies in a Fund to allow the Fund to invest in multiple private companies. Why do people invest
in a Private Equity Fund rather than directly into private companies? ·
The amount of money available for
investment may be too small for the private companies to accept ·
The investor may not have access to
attractive private companies that are seeking investors ·
The investor prefers to pool his
money into a collective investment scheme to benefit from diversification ·
The investor does not have the time
to closely monitor the companies he invests in and wants to leave it to
professionals to manage Please email us if you would like us to find
out more about how you can invest in a Private Equity Fund. |
||||
ã Advantage
Business Consultancy Pte Ltd
|
||||
