The fact that a private equity company is listed on a stock exchange does not influence its core business: investing in unquoted companies.
The phrase “private equity” became widespread in the late 1980s following major buyout fund activity. Private equity, as the term suggests, involves investments of equity capital in private businesses. It provides long-term, committed share capital, to help unquoted companies grow and succeed.
The term private equity does not require that the investing company itself is private. What has been neglected for some time is the existence of listed private equity - an exposure through a share in a private equity company traded on a stock exchange.
Although there are different organizational structures between listed and unlisted private equity, an investment in listed private equity exhibits similar or even equivalent characteristics to an investment in unlisted private equity.
Defining characteristics like investment styles: “buyout, venture and growth capital” and financing styles: “equity, mezzanine, and debt” are shared between both, listed and unlisted private equity.
In contrast to limited partnerships, where the investor base is primarily a limited number of institutional investors, the listed private equity market opens this asset class for everyone. Having an organized market at hand to buy and sell a private equity portfolio makes this asset class highly liquid. (please refer to “Benefits of LPE”)