Private equity investments at first glance can be daunting. It is an investment, but not something you’d find on any public exchanges. It is not the same as owning stocks or shares in a company. Private equity investments are when money or capital is invested directly into a private business with the goal of increasing the companies value.
For example, a private equity investment in healthcare could be a private equity firm pumping money into a pharmaceutical brand with the intention of reaping the profits of the funds at their maturity. These private markets are not easily accessible to just anyone because you need a lot of capital to make a significant difference in a company’s growth trajectory.
How To Invest
Firstly, look for smaller start-ups that you believe in or even a family company that is beginning to grow. If neither are currently possibilities look into the bigger trusted banks and private equity firms that offer a fund that you can invest. This will seem similar to an index fund in the sense that you will not have to figure out which companies to invest in but far less liquid than an index investment as this is all about growing a business over a long period of time not the day-to-day changes in a company’s value.
Of course, if you are the next Jeff Bezos, by all means, find a company of choice and start investing!
But How Does It Work
You were eager to learn how to invest but do you know how it all works? It all begins when a company is selected, the next step is to gather your capital whether through investors or your own investment, once the goal you decided on is reached all that money will be pumped into the company of choice.
Selecting a company that has a high ceiling for potential growth but currently is not able to break out or may even at the present be in some financial problems or other industry distresses. The vulnerability will make for a healthier leverage when it comes to the agreement of what your contribution to the company’s growth will yield.
A perfect scenario would be to find a company with massive growth potential that is currently drowning in a pool of debt, with your investment being the solution to repay the debts immediately while also breathing life into a company with vast potentials. Your bargaining power is a lot more when you make a significant change in the business and they definitely owe the growth to your investments.
Private Equity South Africa
South Africa is booming with start-ups and some successful giants of the industry for those with the budget to start investing in. Start doing your research and figure out which private companies you can stand to have a stake in their growth or even ownership depending on the strategy you come up with to take the very lucrative private equity world