Private equity funds

Produced in partnership with Dentons

Practice notes

Private equity funds

Produced in partnership with Dentons

Practice notes

This Practice Note considers key attributes of collective investment vehicles designed for investment in unlisted (or public to private) companies. It touches on tax considerations, structure and documentation, the life span of such funds, management fees and carried interest. It also considers relevant UK regulatory measures.

What is a private equity fund?

A private equity fund (PE fund) is a collective investment vehicle that invests primarily in unlisted securities. Opportunities to invest in such securities, often private limited companies, tend not to be publicised and are therefore generally individually and privately negotiated. As a result, it is difficult for investors outside the private equity industry to gain direct exposure to this type of investment. However, pooling investor contributions via a PE fund managed by a professional manager allows investors to gain exposure to these opportunities. Inward investment by a PE fund can be attractive to investee companies because: PE funds provide capital to help portfolio entities to grow; they allow investment in securities which are transitioning from public to private trading; or they can revitalise companies which are insolvent or facing financial

Jurisdiction(s):

United Kingdom

Key definition:

Private equity definition

What does Private equity mean?

Equity-related capital used to finance change in an unquoted (ie non-public) company. Private equity is an investment in shares which are not quoted on the stock exchange, and are therefore less marketable (and liquid) that public equity (ie quoted shares).

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