What is private equity?
Private equity (PE) is investment in unlisted companies, usually through funds that buy all or part of mature companies, develop them over a few years and then sell them on at a profit. Unlike trading on an exchange, the investment happens outside a regulated market and the capital is locked up for a long time.
Private equity and venture capital
Private equity and venture capital both fall under the Swedish umbrella term riskkapital. The difference is company maturity: venture capital invests in young growth companies, while private equity usually targets established, profitable companies — often through a buyout.
How a PE fund works
A PE fund raises capital from investors (limited partners), invests in a portfolio of companies and is managed by a fund manager (general partner). The manager charges a management fee and a share of the profit, known as carried interest. Funds typically have a life of 8–10 years.
Private equity for individuals
Traditional PE funds have high minimums and target institutions and wealthy individuals. Someone who wants exposure to unlisted companies on their own can instead buy shares directly in individual unlisted companies, for example via Accumeo.