These are joint investment programs specialized on the acquisition of equities at non-listed companies, whether they are start-ups or companies in growth, expansion or mature stage. The fund’s objective is to attain return from income and dividends in addition to the capital gains expected upon exiting the investment.
Before proceeding implementation of the private equity investments, the management team conducts an extensive research about the company and its management team, main sources of revenue, competitors, position in the markets, future perspectives, new developments and other factors that enhance the chances of success of investment. Private equity funds are divided into three basic types as follows:
- Venture Capital Funds: Venture Capital Funds: Focus on building businesses through investment in companies in the stage of idea (start-up) or with product in the stage of development and not provided to the market yet. Hence, the revenues and profits will be achieved in the medium to long term. This type of funds is of the highest risk, and accordingly, it is expected to be higher than ordinary returns in the market. The fund’s manager draws strategy and business plans more deeply and design and applies strict mechanisms of follow up of the performance to manage and mitigate business risks.
- Growth Capital Funds: Concentrate on the investment in existing working companies that make suitable revenues but needing capital to develop its products, expand or to enter new markets. This type of funds is of medium risks. The fund’s manager draws strategy and business plans in less deep way and ensure the existence of effective mechanisms for follow up and performance monitoring to manage and mitigate business risks.
- Buyout Capital Funds: Focus on investment in companies enjoying high levels of stability and having relatively stable cash flows. Private Equity Companies or Funds often finance the buyout process through bank loans. This type of funds is of relatively lower risks compared Venture Capital Funds and Growth Capital Funds.
Each type of Private Equity Funds can be classified as Generic Private Equity Fund (established for investing and managing investments in several sectors) or Sector Based Private Equity Funds (established for investing and managing investments in specific sectors).
Related Funds :
|1||Mulkia Private Equities Fund – Education Sector|