Why invest in Private Equity
Private equity can be an attractive asset class for many investors as it can boost the long-term performance of their investment portfolios.
Private equity refers to privately negotiated investments that are typically made in non-public companies. Private equity investments can be made in a range of stages of a business’s life, financing everything from start-ups to well-established firms.
Over time, companies have been increasingly shunning the spotlight and regulatory burden of the public markets and turning to private equity for support. While the number of publicly-listed companies globally has declined by 37% since 2000, the number of private equity-backed companies has grown by more than 512%. We believe that this trend is here to stay. An investment in PIN offers shareholders exposure to a market that is expected to exceed c.$11.97tn of assets under management globally by 2029.
What private equity offers
Access
To fast-growing private companies in niche sectors that are not available via the public markets.
Opportunity
The number of publicly quoted companies globally has been shrinking. Many companies are staying private for longer. They may not go public at all.
Long-term outperformance
With its active management approach, private equity has historically outperformed the public markets over the long term.
Diversification
For a well-balanced investment portfolio.
Private equity managers provide “hands-on” support to create long-term value
The best private equity managers don’t just provide capital. They work closely with company management teams and apply their own bespoke strategic and operational expertise to create long-term value in companies. They can achieve this in a variety of ways such as:
- Taking advantage of market trends
- Driving product innovation
- Improving sales and marketing
- Helping to attract and recruit high-quality talent
- Consolidation through buying other smaller companies; and
- Tapping into technological advancements.
Once agreed growth targets have been met, and usually after several years, the private equity manager may decide to sell their interest in their portfolio company. Private equity managers choose when and how to sell the company at a profit, and then position it for sale. Typically, private equity managers sell their companies in three main ways: to corporate/strategic buyers; to another private equity manager that will take the company into its next stage of growth, or by publicly listing the company on a stock exchange.
The role of a private equity manager
We’re excited about the breadth of opportunities in private equity, particularly in the mid-market. These companies are often family- or founder-led and they are being owned for the first time by a private equity manager. The private equity managers that we back are often sector experts who bring years of knowledge, experience and networks. By working closely with the company management teams, they can implement change and create value in these businesses without the regulatory burden or the pressure of being in the spotlight of the public markets.
Jeff Miller Pantheon Chief Investment Officer
Achieving attractive returns in private equity
The spread of performance in private equity is much wider than in other asset classes. Therefore selecting and accessing the best private equity managers with a strong track record and a proven strategy is key to achieving success.
We believe that the best private equity managers are often sector experts, invest alongside company management to ensure that everyone’s interests are aligned, use debt sensibly and are able to navigate economic cycles successfully.
Case Studies
Discover some of the companies that Pantheon International has backed.
Current
Imperfect FoodsImperfect Foods was founded in 2015 with a mission to eliminate food waste and build a better food system for everyone.
Current
Flynn Restaurant GroupFlynn Restaurant Group is the largest franchise operator and one of the 20 largest food service companies in the USA.
Current
Acceleration AcademiesAcceleration Academies partners with public school districts to support students who face challenges that prevent them from succeeding in conventional school environments.
Removing the barriers to investing in private companies
Private equity investment opportunities are typically restricted and may be out of reach for certain investors. This is because investors are expected to lock up their capital for at least ten years and they may not have the high minimum amounts that are necessary for investment. In addition, investing well in private equity usually requires specialist knowledge and deep relationships with leading private equity managers. Some investors may simply not have the resources to handle the complex administration that is a feature of such investments.
Buying shares in a listed private equity company, such as PIN, allows investors to overcome these issues and gain access to an actively-managed, global portfolio of private companies. Investors benefit from the simplicity and liquidity of being able to buy and sell shares that are trading on a recognised stock exchange.
Investing in PIN is Simple – here's how
Shares in PIN are traded on the London Stock Exchange. An investment in PIN can be made through a broker, financial intermediary or through a number of online platforms.
