What is Private Equity?
some of us reading this stories, the word private equity may seems a little bit unfamiliar. The definition of private equity by the famous Investopedia is as follows, “Equity capital that is not quoted on a public exchange.” Simple isn’t it? Example of private equity in Indonesia is the Orang Tua group.
So now we understand about private equity, but what’s in it for us finance students? The answer is the Private Equity Firm who specializes in dealing about the private equity. A private equity firm is an investment manager that makes investments in the private equity of operating companies through a variety of loosely affiliated investment strategies, including leveraged buyout, venture capital, and growth capital.
Private Equity firm is a very viable option for us finance students as a career, and they also offer a competitive reward compared to other financial institution.
Private Equity Strategy
Below are some of the strategies commonly used by Private Equity firm as a base for their operation. The strategies we describe are used for more mature companies that already have an operating cash flow.
Leveraged buyout is strategy of making equity investments as part of a transaction in which a company, business unit or business assets is acquired from the current shareholders typically with the use of financial leverage, in other words debt. 2.
Growth Capital is a type of private equity investment, most often a minority investment, in relatively mature companies that are looking for capital to expand or restructure operations, enter new markets or finance a significant acquisition without a change of control of the business.
Mezzanine Capital refers to a subordinated debt or preferred equity that represents a claim on a company's assets, which is senior only to that of the common shares. Mezzanine financings can be structured either as debt (typically an unsecured...
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