Generally, private equity funds are organized as limited partnerships which are controlled by the private equity firm that acts as the general partner. The fund obtains commitments from certain qualified investors such as pension funds, financial institutions and wealthy individuals to invest a specified amount. These investors become passive limited partners in the fund partnership and at such time as the general partner identifies an appropriate investment opportunity, it is entitled to "call" the required equity capital at which time each limited partner funds a pro rata portion of its commitment. All investment decisions are made by the General Partner which also manages the fund's investments (commonly referred to as the "portfolio"). Over the life of a fund which often extends up to ten years, the fund will typically make between 15 and 25 separate investments with usually no single investment exceeding 10% of the total commitments.

General partners are generally compensated with a management fee, defined as a percentage of the fund's total equity capital, as well as a carried interest, defined as a percentage of profits generated by the fund (so long as some minimum return for the investors called the hurdle rate is achieved). Typically, general partners of funds will receive a management fee of 2% and carried interest of 20%. (Although typically, the carry is reduced by the amount of the management fees received). Gross private equity returns may be in excess of 20% per year, which in the case of leveraged buyout firms is primarily due to leverage, and in the case of venture capital firms, due to the high level of risk associated with early stage investments.

Although there is a limited market for limited partnership interests, such interests are not freely tradeable like mutual fund interests.

From India , New Delhi
The topics of fund raising issues make me feel very interested, but i am very new in the field of serios finance, so i kindly request you to provide me some more basic details on what is private equity and related issues.

From India , Ahmadabad
Hello dear It seems to be vey intresting but u Made it very complex .Can u Pls explain it in the paralance of comman man’s understaning. Brajesh
From India , Indore
Private equity is private ownership, as opposed to stock ownership, of a company. Private equity investors can buy all or part of a private or public company, and they usually have a 5 to 10-year time horizon for which they want to keep their investment before selling. Private equity firms typically look for about a $2.50 return for every dollar invested.
These private stakes in a company are usually bought by private equity firms. Firms can keep the holdings, or sell these stakes to private investors, institutional investors (government and pension funds), and hedge funds. Private equity firms can either be privately held, or a public company listed on a stock exchange.
The private equity business is dominated by well-capitalized investors who are looking for big deals. In fact, the top 10 firms own half of the worldwide private equity assets. Here's a list of the top 10 firms in 2017 and the amount of capital raised over a five-year period:
The money raised by private equity firms is put into private equity funds. These funds are usually structured as limited partnerships, with a duration of 10 years. The funds typically have annual extensions, and the money comes mainly from institutional investors, like pension funds, sovereign wealth funds, and corporate cash managers, as well as family trust funds and even wealthy individuals. It can include cash and loans, but not stocks or bonds

From India,

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