PEINVEST
An alternative asset class consisting of capital invested in private companies or used to take public companies private. PE firms raise funds from institutional investors and high-net-worth individuals, investing in companies to create value through operational improvements, strategic repositioning, and financial engineering.
The acquisition of a company using a significant amount of borrowed money (debt) to fund the purchase price. The target company's assets and cash flows typically serve as collateral for the debt, allowing PE firms to amplify equity returns.
A type of PE investment that targets minority or majority stakes in established, profitable companies with high growth potential. Growth equity investments typically use little to no leverage and focus on organic expansion, market share gains, and operational scaling.
A form of private equity focused on early-stage, high-growth-potential companies, typically in technology and life sciences sectors. VC investors provide capital in exchange for equity stakes and active board involvement, accepting higher risk in pursuit of outsized returns.
The entity responsible for managing a PE fund, making investment decisions, and overseeing portfolio companies. The GP typically contributes 1-5% of total fund capital and receives management fees and carried interest as compensation.
An investor in a PE fund who provides capital but has limited involvement in fund management and investment decisions. LPs include pension funds, sovereign wealth funds, endowments, insurance companies, family offices, and high-net-worth individuals.