Listed private equity companies are public companies that invest in a portfolio of private ones. Our video below explains the history of listed private equity and how it works.
What is listed private equity?
Listed private equity companies are public companies that invest in a portfolio of private ones.
This is in contrast to unlisted private equity, where institutions use large private funds (‘limited partnerships') to do the same thing - invest in a portfolio of private companies.
So listed private equity provides the same exposure as unlisted institutional private equity, but in a way that stock market investors can access it.
Listed private equity is unusual in the world of listed investment companies, in that it provides access to private companies. Most other investment companies invest in other public companies.
In addition to listed private equity companies that invest directly into private companies, there are two other types of LPE company.
1. A listed private equity fund of funds company provides exposure to private equity funds that in turn invest into private companies.
2. Some alternative asset management companies derive a proportion of their income from fees for managing pools of private equity assets, rather than purely the assets themselves.
Some companies invest in both direct investments and funds, offering a hybrid of the two approaches set out above. Some own the private equity manager.