What is the difference between private equity fund and private equity investment?
There are several main differences between private equity funds and private equity investments:
1 The investment direction is different. Private equity funds mainly invest in the secondary market, including stocks, bonds, futures and other listed trading varieties. Private equity investment is to invest in the equity of non-listed companies, which are usually small and medium-sized enterprises with good growth ability.
2 income is different. Private equity funds invest in the secondary market, and the sources of income are usually capital gains and dividends. And the general income is not very high. Private equity investment is the equity of an unlisted company. Once the invested company goes public, it is possible to earn as little as several times or as much as several times.
Three different risks. We just mentioned that the income of private equity funds will be less than that of private equity investment. However, generally high returns are accompanied by high risks. Once the unlisted company invested goes bankrupt, the capital invested by private placement is equivalent to losing everything.
4 different investment cycles. Private equity funds directly invest in the secondary market, and there are many exit channels in the secondary market, which is easy to clinch a deal. Therefore, the investment cycle of private equity funds is relatively short. On the other hand, if private equity invests in a non-listed company, it usually takes two to three years to transfer value-added or wait for the company to go public. Coupled with the previous research on the company and other reasons, it will lead to a long investment cycle, which generally takes five or seven years.
Generally speaking, although both private equity funds and private investment have the word "private placement", their meanings are completely different, so investors must distinguish them clearly.