What is Private Equity in Finance?
Private Equity Investment is an alternate mode of investment or financing. It consists of investors and funds that directly invest in private companies or companies that are not listed on any stock exchange. Private equity is similar to venture capital as private equity investors also invest in startups for long-term benefits but private equity investors invest in mature companies as well which the venture capitalists don’t. The fund received from private equity is generally used to expand, acquire, or fund new technology and innovation. How does it work? Private equity raises funds both from individuals or institutions; these are limited partners or general partners. These PEs invest in companies to strengthen the company’s balance sheet or to launch its IPO. They also invest in REITs (Real Estate Investment Trusts) and various venture capital funds. Types of Private Equity: Venture Capital : Venture capital is not so uncommon these days. These are called angel i...