Private Equity Investing is investing into privately owned companies. A private investor can inject capital into a business that needs it. In return they will receive part-ownership in
company. The principle is same as investing in stock market, however, there is much more room for growth if company you invest in takes off. Venture Capitalists are private equity investors on a large scale. They make big investments expecting massive returns. Even on a low budget you can be a private equity investor.In this article you will discover:
* What is Private Equity Investing? * How Private Equity Investing plays a part in your portfolio
What is Private Equity Investing?
Private Equity Investing covers investments in unlisted companies at various stages of development. Private Equity Investment is often in form of funding but may include a combination of funding and debt. The major portion of investment return is realised when company or business is sold or listed on a stock exchange. This ‘sale’ date is normally determined before capital is invested. The two main kinds of Private Equity Investing are Venture Capital and Expansion Capital.
Venture capital Strong Venture Capital candidates are normally ‘start-up’ companies that have innovative products that could result in outstanding growth and superior returns for investors. ‘Start-up’ or ‘venture capital’ investment is generally in form of equity into business with no security.
Expansion capital ‘Expansion’ or ‘development’ capital candidates are established businesses that are capital constrained but have good growth prospects. Typically, these companies have a history of profitability but would benefit from additional finance to continue growing. Investment in companies at this stage of their growth is substantially less risky than that in start-up companies but prospects for growth are also far smaller.
