Private capital

Introduction

Private equity is medium and long-term financing that is provided in exchange for an equity stake in unlisted companies with high potential growth. Private equity is not new – it has been around in various forms for nearly 25 years, including the Barbarians in the Gate-style hostile takeover of RJR Nabisco by Kohlberg Kravis Roberts (KKR) in 1989. Private equity is on the rise, with buying firms 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 privately owned securities that are not traded 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 fund’s performance. Typically, companies accessing equity do not have the operating track record or track record to access lower-cost capital alternatives, but they do need capital to grow or expand. This fairness is not a silver bullet or a dark force.

Buys

The houses bought are violating the public markets. Buying groups are like the old conglomerates. Acquisitions have generated a growing share of private equity investments by value and have increased their share of investments from one fifth to more than two thirds between 2000 and 2005. Real estate and acquisitions funds have performed robustly in recent years compared to other asset classes, such as public stocks, certainly a factor in the excellent fundraising they have both enjoyed lately. The purchased people who were the kings of the hill and the masters of the universe suddenly looked like normal people.

European

European venture capital is showing a steady increase in the number of successful VC-backed companies and notable exits. European private equity fundraising has passed the 100,000 million threshold to reach 112,000 million in 2006, a level similar to the 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 IPO, the largest since 2002, raised $ 4. Blackstone’s performance has been even worse than Fortress Investment Group, a mutual fund and hedge fund manager that went public in February. Blackstone is the largest private equity company in the world. Blackstone real estate has done even better: a 29% annual increase since 1991. Blackstone set a record in 2006 by completing $ 101 billion in acquisitions, amid historic levels of fundraising and transaction activity in the US Blackstone, like many other private equity firms, has made much of its money in the takeover business, acquiring undervalued public companies using borrowed money, making them private, upgrading them, and reselling them at a profit. Blackstone’s recent $ 39 billion acquisition of Equity Office Properties Trust demonstrated that few transactions are too big for this new generation of investors.

Investor

Investors in private equity funds include wealthy individuals, insurance companies, college grants, and pension funds.

Conclution

PE is responsible for 1 of every 5 dollars spent. Private equity is an investment asset class that describes private investments in private companies (as opposed to publicly traded companies). Equities are an asset class favored by professional managers because they have historically produced superior returns. PE is interested in the long-term performance of the company.