Private equity and venture capital take equity stakes in businesses across the UK and across a wide-range of sectors. These businesses are typically unquoted – i.e. not listed on a stock market – and will seek to make a return on their investment by growing and improving the company, using not only finance but also their own commercial expertise and business acumen.
The duration of the investment varies but generally it is between four to seven years. This means there is a commitment to building lasting and sustainable value in the companies they invest in.
UK private equity & venture capital key facts
Creating value in a business is key to the private equity and venture capital model. This means improving the business over the lifetime of the investment, so that by the time it comes to sell the equity stake, the company is in a better shape and is worth more than when the investment was first made. Stakes are typically sold to large corporates, other investors or by listing the business on the stock market.
Private equity and venture capital firms raise funds from institutional investors like pension funds, insurance companies, sovereign wealth funds and family-offices. For them, private equity and venture capital is an asset class which has consistently delivered strong returns and continuously outperforms other asset classes, including the public markets. Its ability to produce returns even during times of economic downturn makes private equity and venture capital very attractive for investors.
Private equity and venture capital delivers for both institutional investors and for the wider economy, providing investment, driving innovation and building British business. It is, quite simply, funding the future.
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