In the following, I will point out the different business models, strategies and opportunities for private individuals to invest in the industry. The methods and analysis that are used in this paper are aimed to explain traded private equity to private individuals.
In recent years, the term „private equity“ has become increasingly important in the financial industry due to strong returns and growing revenues. Not only was the industry able to improve its reputation, but it also grew to become more and more interesting for investors, even in risk-averse countries like Germany. The ability of the private equity industry to achieve high returns was driven by different factors, such as the high incentives for both private equity portfolio managers and for the operating managers of businesses in the portfolio. On the other hand, the aggressive use of debt provided by banks with low-interest rates helped the industry to invest with a high leverage ratio. While the industry was able to use financing and tax advantages, which are not open to other companies, they used the advantage of being less regulated.
Additionally, the high confidence in the industry is a reason for the growing interest. A recent survey of institutional investors found that 49 percent of markets analysts expect private equity to outperform the public equity market by a strong 4 percent per year or more. In addition, 45 percent believe that private equity will outperform the public equity market by 2 to 4 percent per year. Because of this high confidence within the industry, private equity has grown to become one of the most attractive and an alternative investment opportunity.
Especially in regards to the financial market with low-interest rates and high multiples in the public equity market, there are reasons as to why private individuals are seeking alternative investment opportunities. Due to a growing economy, private equity funds have had years of strong growth and have been the biggest winner in the ten-year cycle since the global financial crisis. The global private equity industry still has more than US$v3.1 trillion in assets under management with US$ 1.1 trillion in cash, or so-called ‘dry powder’, to invest, based on the research of data provider Preqin. While looking at the industry statistics, it is apparent that private equity is already on the same path that they have been on prior to the financial crisis that took place in 2007.
Inhaltsverzeichnis (Table of Contents)
- Introduction
- Topic and Relevance
- Research Question
- Overview
- Private equity strategies
- Venture capital
- Growth capital
- Buyout
- Business Models
- Exchange traded funds
- Listed private equity companies
- Other business models
- Performance
- Stock market developments
- Private equity market
- Performance of private equity ETFs
- Financial industry performance
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This paper aims to explain the concept of publicly listed private equity to private individuals, highlighting the different business models, strategies, and investment opportunities within the industry. It explores how private individuals can participate in the growth of the private equity market, given that access is traditionally limited to institutional investors or high-net-worth individuals.
- The appeal of private equity as an alternative investment opportunity.
- Different strategies employed by private equity firms (venture capital, growth capital, buyout).
- Various business models for accessing private equity investments.
- Performance analysis of private equity investments compared to public equity markets.
- The growth and trends of the private equity market, particularly in Germany and Europe.
Zusammenfassung der Kapitel (Chapter Summaries)
1 Introduction: This chapter introduces the growing importance of private equity in the financial industry, highlighting its strong returns and increasing attractiveness to investors. It discusses factors driving high returns, such as high incentives for managers and the aggressive use of debt. The chapter also emphasizes the high confidence in the private equity industry, citing survey data showing that many market analysts expect private equity to outperform public equity. The chapter concludes by focusing on the appeal of private equity as an alternative investment, particularly in low-interest-rate environments, and provides data showcasing the industry's growth and recent performance, particularly comparing current market multiples to pre-2007 levels. The strong performance of the European and German private equity markets in 2017 is highlighted as further evidence of the sector's vitality.
2 Overview: This chapter delves into the strategies of private equity companies, differentiating them from traditional asset management firms. It emphasizes that private equity invests directly in private companies or conducts buyouts of public companies, requiring significant capital commitments from investors. The chapter introduces different investment strategies based on the company's life cycle, setting the stage for a more detailed discussion of venture capital, growth capital, and buyout strategies in subsequent sections. The importance of the general partner's skills and the varying risk profiles associated with each stage are also touched upon.
Schlüsselwörter (Keywords)
Private equity, venture capital, growth capital, buyout, listed private equity companies, alternative investments, investment strategies, performance analysis, market trends, Germany, Europe.
Frequently Asked Questions: A Comprehensive Language Preview of Publicly Listed Private Equity
What is the main topic of this document?
This document provides a comprehensive overview of publicly listed private equity, explaining its concepts, strategies, business models, and performance to a general audience, particularly focusing on how private individuals can access this investment opportunity.
What are the key themes explored in this document?
The key themes include the appeal of private equity as an alternative investment; the different strategies employed (venture capital, growth capital, buyout); various business models for accessing private equity; performance analysis compared to public equity markets; and the growth and trends of the private equity market, especially in Germany and Europe.
What are the different private equity strategies discussed?
The document discusses venture capital, growth capital, and buyout strategies, explaining how they differ and relate to the company's life cycle and risk profiles.
What are the business models for accessing private equity investments?
The document covers exchange-traded funds (ETFs), listed private equity companies, and other business models for accessing private equity investments.
How does the performance of private equity investments compare to public equity markets?
The document includes a performance analysis of private equity investments, comparing them to stock market developments and the performance of private equity ETFs. It highlights the strong performance of the European and German private equity markets, particularly in 2017.
What is the target audience of this document?
The target audience is private individuals seeking to understand and potentially participate in private equity investments, traditionally limited to institutional investors or high-net-worth individuals.
What are the key takeaways from the introductory chapter?
The introduction highlights the growing importance and strong returns of private equity, factors driving high returns (high manager incentives and aggressive debt use), and its attractiveness as an alternative investment in low-interest-rate environments. It also showcases the industry's growth and recent performance, comparing current market multiples to pre-2007 levels and emphasizing the strong performance of the European and German markets in 2017.
What is covered in the overview chapter?
The overview chapter delves into the strategies of private equity companies, differentiating them from traditional asset management firms. It emphasizes direct investment in private companies or buyouts of public companies and introduces different investment strategies based on the company's life cycle (venture capital, growth capital, and buyout).
What are the key words associated with this document?
Key words include: Private equity, venture capital, growth capital, buyout, listed private equity companies, alternative investments, investment strategies, performance analysis, market trends, Germany, Europe.
- Citation du texte
- Marc Jacob (Auteur), 2018, Publicy listed private equity, Munich, GRIN Verlag, https://www.grin.com/document/456467
