A significant share of the global economy is in private ownership. Rather than list on public exchanges, many private companies prefer to seek long-term investment capital from private equity investment funds in order to realize their growth potential.
Private equity fund managers typically take a majority stake in their investments, which they generally hold for 3-7 years. During the hold period, private equity managers aim to create value by following an active ownership model, aligning interests with management and other stakeholders, providing valuable strategic and operational input, and improving governance structures. The long investment period typically allows companies to better withstand periods of volatility.
Investors in private equity funds have in the past been rewarded with outperformance over public markets. For this reason, many of the world's most sophisticated institutional investors have included allocations to private equity in their portfolios for decades.
However, the long investment periods and illiquid nature of private equity investing has meant that traditionally private equity funds have only been available to institutional investors. Listed private equity companies such as Princess Private Equity provide shareholders with exposure to private equity, overcoming many of the traditional barriers to accessing the asset class.