Private Equity Masterclass

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Private equity forms part of a broader range of “private finance” investment funds aiming to provide financing by the acquisition of equity stakes and securities not listed on the stock exchange. The purpose of what follows is to describe the structure (characteristics of supply and demand, incentives for stakeholders, etc.) of this funding channel and assess its importance (size, etc.), in order to identify its functioning and the risks involved more clearly. In a context of very limited information, this investigation is based notably on sources of information and on relevant research work that are publicly available.

Given the illiquidity of unlisted assets, the length of investment horizons, the customization of vehicles (legal and tax arrangements), the rise of private equity, mainly reserved for informed investors, is linked to that of institutional asset management. However, it also tends increasingly to be promoted to high net worth retail investors and the general public – with possible implications for the protection of investors who need to assess the valuations, performance and risks of their fund investments.