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Inside The World of Private Equity: What Investors Need To Know

With the increase of defined contribution savings plans and the continuing rise of the wealth management industry, exposure to a public company investment is common among individual investors. Yet, during the past 20 years, the number of public companies in the U.S. has dropped from a peak of around 8,000 U.S. companies listed in the late 1990s to approximately 5,000 being listed in the 2020s. Due to the decreasing sources of growth in traditional asset classes like public equities, many investors are now placing increased focus on opportunities in private markets.

So, what is private equity? Private equity is a term used to describe investment in private companies, a company that is not listed on an exchange. Although there are a number of different forms of private equity, common categories of private equity include buyouts, venture capital, growth equity, secondaries, and distressed. Other forms of private investments include private credit, infrastructure, and energy funds. While investors typically associate private equity with a high amount of risk compared to public markets, each of these sub-asset classes have varying risk profiles, return dynamics, and liquidity constraints which differentiate their risk factor. There are several reasons that explain why companies choose to stay private, including the ability to raise both equity and debt capital in the less regulated private markets, avoiding the stricter regulations of public markets, and obtaining financing for expansion at more favorable rates while retaining greater control. However, from an investor's perspective, the higher level of internal control in private markets also comes with potentially greater risks due to reduced regulatory oversight.

Private equity investments are generally less liquid compared to public holdings, however, investors in private equity expect to receive incremental returns above public market results. This is often attributed to the ability of general partners to transform businesses and create value through their operational expertise. Fundraising data for the global private equity industry demonstrates strong activity, with an annual capital-raising range of $600-700 billion over the last several years leading up to 2020. Although the number of funds raising capital has declined from 2017 to 2020, the average capital raised per fund has increased. In other words, fewer funds are raising larger amounts of capital on average.

Looking For Private Investments?

Belite Capital is an independent third party that specializes in private equity compliance and offers exclusive investment opportunities to accredited investors. Accredited investors, who meet certain financial criteria, can benefit from Belite Capital's private investments that are not available to the general public. We utilize our expertise in identifying and evaluating investment opportunities, along with our extensive regulatory expertise to ensure thorough validation of investments, safeguarding against fraud or any potential risks that could harm your valuable

investment. Are you looking to diversify or examine your portfolio?

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