A:

Though venture capital is one particular type of private equity, there are also other investment opportunities in well-established private or public companies. Though most private equity investment opportunities require steep initial investments, there are still some investment opportunities available to every investor.

The Appeal of Private Equity

Private equity investments are coveted by investors due to the lack of outside public influence on the share price. Many times, a group of institutional and accredited investors pool their money together so they can purchase a large publicly traded company with hopes of revamping the capital structure or otherwise improving the company's finances, then selling the company or cashing out in an initial public offering (IPO) at a later date.

Investing in Private Equity

For investors who are not in a position to put forth millions of dollars for long-term investments, private equity is often ruled out of a portfolio – but it shouldn't be. There are private equity investment firms whose sole business activity is this type of acquisition, management and profitable disposition. These entities are called business development companies, and many of these firms offer publicly traded stock, giving average investors the opportunity to own a slice of the private equity pie. Some examples of these stocks are Apollo Global Management, LLC (APO), The BlackStone Group, L.P. (BX) and KKR & Co, L.P. (KKR). Additionally, average investors can purchase shares of an exchange traded fund (ETF) that holds shares of private equity companies, such as ProShares Global Listed Private Equity ETF (PEX).

RELATED FAQS
  1. Why are private equity investments usually reserved for rich people?

    Learn what investors without a high net worth can do to invest in private equity investments, and discover the benefits and ... Read Answer >>
  2. What are the major differences between investment banking and private equity?

    Read about the major differences between investment banking and private equity, two iconic financial industries with mixed ... Read Answer >>
  3. Can mutual funds invest in private equity?

    Learn about the mutual funds that invest in private equity by buying shares of investment holdings firms that specialize ... Read Answer >>
Related Articles
  1. Financial Advisor

    Is Private Equity the Right Move Now? (PSP, PEX)

    With equities extremely volatile, does it make sense to move to private equity?
  2. Managing Wealth

    How To Invest In Private Companies

    It can be tough to analyze a company that doesn't trade publicly, but there are several advantages.
  3. Financial Advisor

    Should My Portfolio Include Private Equity?

    Private equity offers a lot of potential, but is it worth the risk?
  4. Financial Advisor

    Use Private Equity Strategy to Invest

    Forget trying to be a great trader. Learn to invest like private equity firms for superior results.
  5. Investing

    Private Equity: America's Richest Bosses

    Beyond your wildest dreams: heads of private equity firms are taking home America's biggest paychecks.
  6. Insurance

    A Primer On Private Equity

    Private equity investing is becoming more accessible for individual investors; find out how you can get involved.
  7. Retirement

    Coming Soon: Private Equity In 401(k) Plans

    The day will soon come when private equity is commonly found among 401(k) plan investment options. Here's who's leading the charge and what to watch for.
  8. Small Business

    How To Invest In Private Companies

    Owning a private firm means sharing more directly in the underlying firm’s profits.
  9. Investing

    Effects Of Interest Rate Hikes On Private Equity

    Private Equity firms would be wise to lock in current interest rates on their debt payments in anticipation of rate hikes.
  10. Investing

    Tax Wars: Private Equity Vs. Wall Street

    Private equity firms could encounter challenges with a proposal to change interest expense deductibility.
RELATED TERMS
  1. Private Equity

    Private Equity is equity capital that is not quoted on a public ...
  2. Repackaging

    When a private equity firm takes a public firm private by purchasing ...
  3. Equity

    Equity is the value of an asset less the value of all liabilities ...
  4. Privatization

    1. The transfer of ownership of property or businesses from a ...
  5. Club Deal

    A private equity buyout or the assumption of a controlling interest ...
  6. Private Company

    A company whose ownership is private. As a result, it does not ...
Trading Center