Private equity in Ukraine. What are investment funds in Europe
Частный капитал в Украине

Private equity in Ukraine. What are investment funds in Europe

Private equity in Ukraine (Private capital), a good alternative to bank loans. Many entrepreneurs find themselves in a situation where they need additional financial resources to develop their product or service.

What is private equity?

Private equity, or private equity, is direct investment that is not traded on the stock exchange. Such capital is formed at the expense of private investments, or funds, as well as investors who directly invest their money in enterprises, or private companies, redeem shares of companies.

Private equity investments

Investments in this kind of capital is an opportunity for each investor to receive profit from the development of an enterprise that has significant growth potential. For investment, you can choose objects yourself, or they can be considered by the proposals of the management company.

Investment capital (private capital) is a type of financial activity that consists in the acquisition by an organization that also specializes in investing in stable companies, in exchange for a controlling stake. Thus, the private equity capital becomes the main owner of the company, usually temporarily, since after some time the purchased shares are usually sold. The investment maintenance period varies, usually depending on the success of the business, as the purpose of the investment is not to hold its own shares, but to generate a profit from the operation. This action should not include raising new funds for the transferred company.

How is private capital invested?

Private equity operations are usually targeted at mature, cash-flow-stabilized companies in which the previous owners want to sell their holdings either due to disagreements between former shareholders, or due to problems with succession of parent companies, or due to the sale of subsidiaries that do not consider strategic in industrial groups. In some cases, the transaction entails the withdrawal of the transferred company from the stock market.

Investment capital has a slightly different concept than the previous one. It is used to refer to the acquisition by an investor of risk capital of shares of current shareholders. This time, there is no capital inflow, but the venture capital becomes the majority owner, the most common cases being succession problems in parent companies or selling divisions, which are no longer a priority for large companies. In addition, this group includes operations known as management acquisitions (MBOs), in which managers use venture capital to buy a company from its current owners, taking the risk of a capital fund into new owners.

Types of private capital

Investing in private capital is a type of asset that is understood as a share in the capital, share or shares of a company that are not listed on the stock exchange (stock exchange). Private equity investments fall into several categories.

Growth capital is the entry into the capital of already mature and experienced companies that want to enter a new market or level of business. Also, a similar procedure is done so that these companies make significant acquisitions, expand their activities, and control over the business does not change hands.

Financed buyout – by increasing financial leverage, the company changes its shareholder structure. Thus, it allows you to capitalize on savings on the source of funds.

Venture capital is an investment in companies or projects that are at an early stage of their development (startups).

Raising capital for your project and working with private investments is a fairly responsible procedure. Of course, you can find a good investment fund on your own, but it makes sense to turn to experienced specialists, as they are called “fundraising experts”. It should be summed up that private equity in Ukraine (Private Capital) plays an important role in the development of medium and large enterprises.

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