Private Equity

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Private Equity

Equity shares that are not traded on a public exchange.

Private Equity

1. Ownership in a corporation that is not publicly-traded. That is, private equity involves investing in privately held companies. Most of the time, private equity investors are institutional investors and high net-worth individuals who have a large amount of capital to commit to these investments. Private equity is usually held for a long period of time, and trading in it is useful when a company is in danger of bankruptcy, because it provides access to a great deal of capital very quickly.

2. A company that trades in private equity. Often, private equity firms band together and buy out publicly-traded companies, making them privately held.

Private equity.

Private equity is an umbrella term for large amounts of money raised directly from accredited individuals and institutions and pooled in a fund that invests in a range of business ventures.

The attraction is the potential for substantial long-term gains. The fund is generally set up as a limited partnership, with a private equity firm as the general partner and the investors as limited partners.

Private equity firms typically charge substantial fees for participating in the partnership and tend to specialize in a particular type of investment.

For example, venture capital firms may purchase private companies, fuel their growth, and either sell them to other private investors or take them public. Corporate buyout firms buy troubled public firms, take them private, restructure them, and either sell them privately or take them public again.

References in periodicals archive ?
Intel's private equity investment program is head- ed by Leslie Vadasz, an Intel senior vice president, director of corporate business development and member of Intel's board of directors.
In 1994, Enron Capital & Trade Resources saw an opportunity to leverage its long-term growth strategy by acquiring or investing in independent oil and gas producers, so it worked out an agreement with CalPERS, under which the pension fund made a private equity investment of $250 million.
Moreover, the available data on returns on private equity investments indicate that during the 1980s, non-venture investing generated higher returns than did venture investing, suggesting that private equity capital has flowed to its most productive uses.
5 billion to private equity investments, and Princeton University recently announced it would earmark 10 percent of its investments to private equity.

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