What is Private Equity Investing

Private equity is a financial term which specifically refers to an asset class consisting of equity securities in companies that are operating which are not publicly traded on a stock exchange. The styles and types of public equity have a wide array and that different countries have a different meaning for the term private equity.

What are the different categories of private equity investments?

The LBO or Leveraged Buyout or Buyout This is a strategy that makes equity investment as part of a transaction where a business unit, a company, or business assets are typically acquired from current shareholders using financial leverage.

Venture Capital This is an extensive subcategory of private equity referring to equity investments made in less mature companies, for the purpose of launching, early development, or expanding a business.

Growth Capital This also refers to equity investments in more mature companies looking for capital to restructure or expand operations, venture new markets, or finance a major acquisition without changing control of the business.

What are other strategies that can be considered private equity investment or a close adjacent market?

These strategies include

1) distressed or special situations that can refer to investments in equity or debt securities of a distressed company;
2) mezzanine capital or a subordinated or preferred equity;
3) real estate in terms of private equity which typically refers to the riskier end of the investment spectrum including "value added" where the investments often closely resemble leveraged buyouts;
4) secondary investments;
5) infrastructure;
6) energy and power; and,
7) merchant banking.