Private equity: Direct or indirect investment
Professional and institutional investors can invest directly or indirectly in high-growth, unlisted companies. The private equity asset class offers attractive returns because it has a higher risk premium. It is also well suited for risk diversification.
What is private equity?
Private equity generally refers to investments in companies that are not traded on the stock exchange. The aim of such an investment is to sustainably improve the operational and financial performance of the company in order to sell it with a return on investment. Typically, these are growth companies that require external experience and expertise in addition to capital for investments in order to unfold their full potential. Access to investments into such companies is very limited and requires resource-intensive due diligence. This scrutiny is crucial as most of the companies are at an early stage of development and therefore often only generate low profits.
Investments through private equity funds offer the opportunity to exploit the full potential of this large market. The goal of the management of a fund is to identify suitable target companies and to perform a thorough due diligence on them. The risk can be diversified by investing in several different companies. If private equity funds invest in other private equity funds (fund-of-fund investment) or are integrated as a building block in a portfolio with other asset classes, the diversification effect can be even higher.
We actively support companies with our strategic know-how and network right up to the successful exit.
Andreas Nicoli Head of Private Equity
