What is a Private Equity Fund?
Private equity is a form of investment partnership that acquires, manages, and works to grow private companies before selling them.
In the early stages of private equity from 1940-1960, venture capital firms were the first to establish equity financing to new high growth businesses. The focus of these investments was primarily on technological innovation and entrepreneurship. By 1970, leveraged buyouts became a leading form of private equity investments. Firms such as KKR and The Blackstone Group would acquire companies, with the goal of improving the operations and margins of the business in order to sell them for a profit.
There was a significant amount of growth in the PE market in the 19990s and early 2000s. There were many emerging firms, more acquisitions, larger fund amounts, and a wide variety of investment strategies developed during this time.
The 2000s and 2010s saw further growth through globalization as there were investment opportunities in markets across the globe and firms took advantage. Similar to the hedge fund market, the private equity market also faced regulatory changes during this period such as the Dodd-Frank Wall Street Reform and Consumer Protection Act in the US, and the Alternative Investment Fund Managers Directive in Europe, to protect investors and customers by increasing monitoring and communication.
Recently, the focus of these companies has been creating value through strategic ventures, operational efficiencies, and ESG considerations. Private equity continues to be a strong force in the financial landscape, aiding firms across the globe by providing capital, resources and support to help them grow.
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