“ Private Equity
× Deepa Rose Jacob
× Eby Jose
× Jojy Abraham
Definition of 'Private Equity'
Equity capital that is not quoted on a public exchange.
Private equity consists of investors and funds that
make investments directly into private companies or
conduct buyouts of public companies that result in a
delisting of public equity. Capital for private equity is
raised from retail and institutional investors, and can
be used to fund new technologies, expand working
capital within an owned company, make acquisitions, or
• The majority of private equity consists of
investors who can commit large sums of money
for long periods of time. Private equity
periods to allow for a turnaround of a
distressed company or a liquidity event such
as an IPO or sale to a public company.
• Private equity is a form of equity investment into
private companies that are not quoted on a stock
• aimed at gaining significant, or even complete, control
of a company in the hopes of earning a high return.
• A private equity investment will generally be made by
a private equity firm, a venture capital firm or an
institutional investors and accredited investors who
can commit large sums of money for long periods of
time. Private equity investments often demand long
holding periods to allow for a turnaround of a
distressed company or a liquidity event such as an
IPO or sale to a public company.
ADVANTAGES OF PRIVATE EQUITY
• The universe of potential company investments for private
equity is huge. It is a vast and unchartered land of
• Private equity firms are extremely selective and spend
significant resource assessing the potential of companies, to
understand the risks and how to mitigate them.
• Private equity firms invest in a company to make it more
valuable, over a number of years.
DISADVANTAGES OF PRIVATE EQUITY
• Restricted access
• Barriers to entry
• Private companies are illiquid by their nature
• Higher costs
List of private equity firms
• TPG Capital
• The Carlyle Group
• The Blackstone Group
• Kohlberg Kravis Roberts
• Warburg Pincus
• Goldman Sachs Principal Investment Area
• Advent International
• Apollo Global Management
• Bain Capital
• CVC Capital Partners
Definition of 'Angel Investor'
An investor who provides financial backing for small
startups or entrepreneurs. Angel investors are usually
found among an entrepreneur's family and friends.
The capital they provide can be a one-time injection
of seed money or ongoing support to carry the
company through difficult times.
An investor who provides financial backing for small startups or
An angel investor or angel (also known as a business angel or informal
investor) is an affluent individual who provides capital for a business
start-up, usually in exchange for convertible debt or ownership equity.
A small but increasing number of angel investors organize themselves
into angel groups or angel networks to share research and pool their
investment capital, as well as to provide advice to their portfolio
The advantages of angel investing:
1. Can provide the needed capital for a startup.
2. Ability to raise capital in small amounts.
3. Flexible business agreements.
4. Can bring forth vast knowledge and experience to a
5. Does not require high monthly fees.
6. Are located everywhere, in practically all industries.
The disadvantages of angel investing:
1. Rarely make follow-on investments
2. Can actually be deceptive
3. Can be costly
4. Do not have national recognition
5. Active company involvement can lead to problems
• Venture capital (VC) is financial capital provided to early-stage, highpotential, high risk, growth startup companies.
A venture capital fund refers to a pooled investment vehicle (in the
United States, often an LP or LLC) that primarily invests the
financial capital of third-party investors in enterprises that are too
risky for the standard capital markets or bank loans. These funds
are typically managed by a venture capital firm, which often employs
(scientists, researchers), business training and/or deep industry
Distinctions between angel investors
There are four key distinctions:
1. The amount of money invested
2. The professionalism of the investor
3. Whose money is being invested
4. Whether the investor takes a seat on the company’s