What Does Private Equity Mean?
Private equity is an investment capital source that can be derived from wealthy (high end) individuals or organisations like pension funds, used for investment in a wide range of projects that are not funded by privately traded stock. It is often the case that the money private equity companies raise, along with borrowed cash, is ploughed into firms that are seen to be under performing – and are believed to be able to do a lot better.
The general idea is to buy the company and then sell it once it is turning a profit. The industry has grown a great deal over the years. In the United Kingdom, it is thought that around 80 billion pounds has been invested in nearly 30 thousand companies, making it a very important part of the economy.