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Private equity is money invested by companies or individuals directly in another company. This money is generally a composition of debt and equity that is commingled with that of investors to obtain a controlling interest 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 usually use an amount of debt along with the balance to invest in other companies. This results in maximizing returns for these companies where they will be able to make large buyouts without investing a large amount of their own money.
A Private Equity Fund is an investment management company that makes investments in companies through various strategies. These companies are constantly pooling funds to increase the purchasing power and the number of investment options available to them.
Private Equity Funds work from several approaches to make their investments, which 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 the contributors of the majority of the capital along with the general managers who manage the fund.
The private equity fund usually takes the form of a trust and is comprised of two main parts:
Fund the fund by investors.
There are two ways to do this:
The Fund Manager, in this case Smart Bit Investors, 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 Smart Bit Investors.
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 that will allow them to increase their potential for success.
At the end of the committed investment term, the fund manager offers for sale the shares of the companies included in our portfolio. We use the following as our exit strategy:
Once the shares are sold, a distribution of the capital and returns is given to the investors with their respective commissions and a percentage for Smart Bit Investors.
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