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Private Equity Investment Company

A private equity investment company is a listed company that invests in unlisted companies or in funds that invest in unlisted companies, with the aim of making a profit.

There are different types of private equity investment; investment might be made by private equity firms, venture capital firms or by angel investors. Each will provide capital to help a company expand, develop a new product or to restructure. Private equity firms might buy majority control of an existing firm whereas venture capital firms and angel investors will usually invest in newer companies without seeking majority control.

Private investment is often sought by small, high-risk companies who are unable to obtain finance elsewhere. Venture capital firms in particular are usually willing to invest in riskier ventures that offer the potential of high returns for the investor. They will commonly have a lot of control over the decisions that are made and a relatively high stake in the business so they will benefit from any increase in value. Private investors will also suffer any losses and could lose their investment entirely if the business they have invested in fails.

Angel investors are normally wealthy individuals who invest their own money in start-up businesses, in return for an equity stake. Angel investors will usually provide a sum of capital that falls somewhere between the amount that can be raised from friends and family and the minimum amount that a venture capital firm will invest. Because of the high risks they are taking, angel investors will typically ask for a high return on their investment if the business does well.

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