basics of private equity

What is Private Equity?

Private Equity is a broad term which commonly refers to any type of non-public ownership equity securities that are not listed on a public exchange. Generally, there are many transfer restrictions on private securities. Private Equity is often abbreviated as PE.

For several reasons, private equity investment is for those who can afford to have their capital locked in for long periods of time and who are able to risk losing significant amounts of money. This is balanced by the potential benefits of annual returns which range up to 30% for successful funds.

Most private equity funds are offered only to institutional investors and individuals of substantial net worth.

Examples of private equity owned organizations include The Automobile Association, Jimmy Choo Ltd, and Boots the Chemist.

For more information, see Wikipedia's definition of Private Equity.