How does it work?
What is Private Equity?
Private equity is the money invested by companies or individuals directly into another company. This money is generally a composition of debt and equity that is commingled with that of investors to obtain controlling interests in a company and to earn a return on the value of that investment.
Private equity invests in private operating companies and is not publicly traded.
Private equity firms typically use a debt amount along with the balance to invest in other companies. This results in maximizing the returns of these companies where they will be able to make large buyouts without investing a large amount of their own money.
Private Equity Fund
A Private Equity Fund is an investment management company that invests in companies through various strategies. These companies constantly pool funds to increase the purchasing power and the amount of investment options available to them.
Private Equity Funds work from various approaches to make their investments. These include buying out existing investors, buying out the founder, providing growth capital and providing recapitalization for a troubled business.
Private Equity Funds are structured as limited partnerships, with limited partners who are contributors of a major part of the assets, along with the general managers who oversee the fund.
Limited partnerships may include:
- Endowment funds
- Universities
- Insurance companies
- Wealthy individuals
- Governments
- Sovereign wealth funds
- Foundations
- Pensions
- Institutions
- Large corporations
- Banks
- Fund of funds
How do Private Equity Funds work?
COB IN IT MARKET
The private equity fund usually takes the form of a trust and is made up of two main parts:
Fund Administrator
Investors
Stage 1:
Investors finance the fund.
There are two ways to do this:
- In a single installment
- Through recurring contributions or payments known as capital calls.
Stage 2
The Fund Administrator, in this case, Cob in it Market, evaluates the companies and projects that are candidates to receive capital investments. Once the best projects have been selected, we make the investments in our portfolio. That is all the companies financed by Cob in it Market.
Stage 3
We offer our financial advisory and other strategic management services throughout the investment period to the companies in our portfolio. Using topics such as corporate governance will allow them to increase their potential for success.
Stage 4
Once the investment term is over, the fund manager puts the shares of the companies included in our portfolio up for sale. We use the following exit strategy:
Selling the fund’s shares to the same company.
Selling the shares to the original shareholders of the business.
Or selling the shares to a third party interested in investing.
Stage 5
Once the shares are sold, capital and returns are distributed to the investors with their respective commissions and a percentage for Cob in it Market.