Private Equity

Introduction to Private Equity

Private equity funds pool the resources of institutional and retail investors to invest in companies that are not yet listed on public markets. They will provide seed or development funding for new and growing businesses. That capital may then be used to fund acquisitions, develop new products or build new infrastructure. Investing at this early stage in a company's development can bring significant returns, but may also bring significant risks.

In return for their investment, investors will receive a share of the profits and will own a portion of the company. When that company is sold, or floated on the stock exchange, investors will also receive a portion of the proceeds.

Private equity funds will aim to mitigate risk by having a series of different investments, though many specialise in particular areas such as technology. Private equity investments are high risk and illiquid. As such, the majority of private equity funds are structured as closed-end investment companies and investment trusts. They will also tend to suffer in a difficult economic climate, when smaller companies tend to go bust. However, they can add both racier returns and diversification to a portfolio.

The tax treatment of investments is subject to tax law and HMRC practice which are subject to change. 

Investment Trusts

Name1 Year (%)3 Years (%)5 Years (%)DiscountNAV
3i Group Plc Ord41.83139.84424.8040.18652.00Buy
3i Group Plc Pref-----Buy
Aberdeen Private Equity Ltd GBP14.4260.15107.40-14.98146.58Buy
Apax Global Alpha Limited Ord Npv18.33---6.01158.00Buy
Better Capital 2009-36.0223.71-16.01-53.12125.86Buy
Better Capital 2012 Ord75.54-36.41-50.00-20.8642.96Buy
Candover Investments Plc Ord23.32-76.14-64.90-23.72156.00Buy
Dunedin Enterprise IT plc59.6257.4740.25-5.41515.00Buy
Electra Private Equity plc Ord25.84135.08236.55-82.885,544.00Buy
F&C Private Equity Trust Ord24.5086.98146.60-1.35356.81Buy
HarbourVest Global Private Equity Ord12.9659.97176.75-16.671,506.00Buy
HgCapital Trust plc Ord21.9781.36102.63-4.271,801.90Buy
ICG Enterprise Trust Plc Ord 10P24.7053.78112.25-15.63936.70Buy
JPEL Private Equity USD23.1671.74128.51-16.721.66Buy
JPEL Private Equity Wts-----Buy
JZ Capital Partners Ord0.8936.8244.24-31.73746.26Buy
JZ Capital Partners ZDP 20223.13----Buy
LMS Capital plc-16.07-41.61-30.63-36.4974.00Buy
Mithras Investment Trust PLC20.6157.65116.75-5.25234.30Buy
NB Private Equity Partners Limited10.1555.74156.70--Buy

ETFs

Name6 Months (%)1 Year (%)3 Years (%)5 Years (%)CurrencySector
DB X-Trackers LPX MM Private Equity UCITS ETF 1C GBP3.5718.2156.05132.41GBPEquity - Other SpecialistBuy
iShares Listed Private Equity UCITS ETF GBP4.6516.1657.09125.33GBPEquity - Other SpecialistBuy

Disclaimer

Interactive Investor does not endorse any particular product. If you are unsure about whether an investment is suitable for you please seek advice from a financial advisor.