Introduction
Private equity is medium- and long-term financing that is provided in exchange for a share in the share capital of unlisted companies with high growth potential. Private equity is not new, it has been around in various forms for almost 25 years, including Kohlberg Kravis Roberts (KKR)’s hostile takeover of RJR Nabisco in the style of barbarians at the gate in 1989. Private equity is booming , with buyout companies poised to raise more than the previous record of $215 billion, set in 2006. PE is a broad term that commonly refers to any type of nonpublic proprietary equity securities that are not listed on a public exchange . PE is very much a “people” business and the investment professionals involved and their interaction as a team will be key in determining the performance of the fund. Capital is typically accessed by companies that do not have the operating history or track record to access lower-cost capital alternatives, but need capital to grow or expand. This fairness is neither a silver bullet nor a dark force.
Purchase
Buy houses are violating public markets. Buying groups are like the old conglomerates. Buyouts have generated a growing share of private equity investments by value, increasing their share of investments from a fifth to more than two-thirds between 2000 and 2005. Real estate and buyout funds have performed strongly in recent years. recent years compared to other asset classes, such as public stocks, no doubt a factor in the excellent fundraising that both have enjoyed of late. The bought people who were kings of the hill and masters of the universe were suddenly seen as normal people.
European
European venture capital is showing a steady rise in the number of successful venture capital-backed companies and notable exits. European private equity fundraising has crossed the €100 billion threshold to reach €112 billion in 2006 alone, a level similar to new capital raised through IPOs on European stock exchanges in the same period. European private equity and venture capital provide a vital source of finance for growing companies in all industrial sectors. Funds focused on Europe represent 26% of the global total, while funds focused on Asia and the Rest of the World represent the remaining 11%.
black stone
Blackstone went public on June 22; its initial public offering, the largest since 2002, raised $4. Blackstone’s performance has even been worse than that of Fortress Investment Group, a private equity and hedge fund manager that went public in February. Blackstone is the world’s largest private equity company. Blackstone’s real estate holdings have done even better – up 29% annually since 1991. Blackstone set a record in 2006 by completing $101 billion in acquisitions, amid historic levels of US fundraising and trading activity. Blackstone , like many other private equity firms, has made much of its money in the buyout business: acquiring undervalued public companies using borrowed money, divesting them, upgrading them and reselling them at a profit. BLACKSTONE’S RECENT $39 BILLION acquisition of Equity Office Properties Trust demonstrated that few deals are too big for this new generation of investors.
investors
Investors in private equity funds include wealthy individuals, insurance companies, university endowments, and pension funds.
conclusion
PE is responsible for 1 in every 5 dollars spent. Private equity is an investment asset class that describes private investments in private (as opposed to publicly traded) companies. Equities are a preferred asset class for professional managers because they have historically produced superior returns. PE is interested in the long-term performance of the company.