Private Equity

RAVI IBS

What is Private Equity

An asset class consisting of securities
invested in operating companies with a
view to generating value
Investment typically lasts between 3-7
years depending on the investment focus
of the company.

PRIVATE EQUITY IS

A source of capital
for companies in
need.

PRIVATE EQUITY IS

A key driver of economic growth

and innovation.

Private Equity Broadly

Defined
Technically refers to any type of equity
investment in an asset in which the equity
is not freely tradable on a public market.
Less liquid
Long Term in nature

Industry Structure
Institutional Investors

Fund of
Funds

Direct
Investment

PE Fund

PE Fund

PE Fund

Operating Companies

PE Fund

Private Equity Categories and Players

Angel
Early Stage: Seed, Start-up

Professional Venture Capital

Early Stage, Expansion, Later Stage

Private Equity
Later Stage, Buyout, Special Situations

Hedge Funds
All Stages

Private Equity Market

PRIVATE EQUITY IS
A steady source of
income for its investors
such as public and private
pension funds, university
endowments and
charitable foundations.

Forms of Private Equity

Leveraged Buyouts
Growth / Expansion Capital
Venture Capital
Others
Distressed Investments
Management Buyouts

Key Player Overlap

Venture Capital

Angel

Private Equity Hedge Funds

Traditional Private Equity Primary

Activity
Professional pools of capital that buy all
the publicly traded equity of target
companies = Go Private
Usually done with borrowed money
High degree of leverage

Aka : Leveraged Buyout

Private equity firms seek out

underperforming or
undervalued companies.
By working with these
companies managers unlock
significant value by:
improving business strategy
injecting managerial expertise
advancing production
technology
expanding distribution

HOW PRIVATE EQUITY WORKS

Private equity funds are typically structured as

partnerships:
Private
Equity
Fund
Manager
(GP)

Limited
Partner
Investors
(LP)

Private Equity Fund

(Limited Partnership)

Portfolio Company
1

Portfolio Company
3
Portfolio Company
2

THE PRIVATE EQUITY MODEL

Private equity firms generally invest in

companies for several years or more. The
goal in every case is to work with
management to improve the companys
performance and make it a stronger, more
competitive enterprise.

PRIVATE EQUITY IS A LONG-TERM

INVESTMENT