Asset managers are companies listed on a regulated markets which derive their income from managing private equity or private debt portfolios and from balance sheet investments in funds they manage.
Business development companies
Business development companies are companies listed on a regulated US market and generate returns through direct investments (equity) in and loan capital (debt) to private companies at all stages of development.
Buyout typically refers to a strategy of making equity investments as part of a transaction in which a company, business unit or business asset is acquired from the current shareholders typically with the use of financial leverage.
The cut private equity firms take when the funds they manage make a profit. This serves as an incentive for fund managers with the remaining profits distributed to investors.
When private equity firms team up to go after large targets. Private equity firms often say these deals help spread out risk and leverage firm-level expertise.
The bonds of firms that have filed for, or are on the verge of, bankruptcy.
Funds-of-funds are listed on a regulated market and produce returns through investments in several private equity funds.
The manager of a private equity fund. This can refer to the private equity firm itself, or the senior partners of a private equity firm. Some of the biggest private equity firms include Blackstone Group, Kohlberg Kravis Roberts, Carlyle Group, TPG (formerly Texas Pacific Group) and Bain Capital.
Growth capital refers to minority investments in mature companies. It is a type of investment suited to a diverse range of growth opportunities, including acquisitions, increasing production capacity, market or product development, turnaround opportunities, shareholder succession and change of ownership situations.
Holding companies are companies listed on a regulated market which generate returns through investments in unlisted or listed firms with a private equity approach (significant participation, active involvement, focus on exits and maintaining board seats).
When a company is bought with mostly borrowed money. The loan is frequently secured by the assets of the target firm.
The investors in a private equity fund. These are usually institutional investors like pension funds and endowments looking for better returns and diversification than those generated in public markets.
Listed private equity (LPE)
LPE is made up of listed vehicles that invest in private equity companies or vehicles. Such vehicles may take the form of corporations, unit trusts, publicly traded partnerships, or other structures, and may focus on mezzanine, buyout or venture capital investments.
An annual fee investors pay to general partners to manage a private equity fund.
Private placements of unsecured, subordinated debt. Due to higher risk relative to senior debt, investors receive higher interest payments and in many cases ‘equity kickers’ in the form of equity warrants.
Other than operational improvements, these are tactics that increase the value of a portfolio company between buying and selling it, such as: buying several related companies and combining them into a single entity, merging a private company with a public entity, or repositioning a company to compete in markets and industries with more potential.
Changes that improve the operating margins of a company, such as: supply chain optimization, product/SKU profitability and rationalization, product enhancements or new product introductions, pursuit of new geographic or market segments, IT investments/rationalization, sales team/sales process optimization, marketing enhancements, and real estate/facilities rationalization.
Seeks to provide cash financing to promising start-ups and companies in early stages of growth in return for an equity stake. It is often the riskiest private equity subclass and tends to focus on the technology and life sciences industries.
The legal inception date as stated in a private equity fund's financial statement.