What is a Private Equity Fund?
A private equity fund is a pooled private investment vehicle that deploys investor capital under a defined strategy, governance structure and fund agreement. Strategies can include buyouts, growth equity, venture capital and other private-company investments.
How Private Equity Funds Work
Private equity funds raise commitments from investors and deploy capital under the fund's mandate. A fund may acquire control or make minority investments. Its term, investment period, holding periods, extension rights and exit options are set by the fund documents and vary by strategy and jurisdiction.
A fund can provide capital, governance and operating support to portfolio companies. Investors also accept illiquidity, fees, valuation judgement and the risk of loss. Eligibility, offering and adviser rules differ across jurisdictions and fund structures.
Example
For example, a buyout fund may acquire control of a company, agree a value creation plan with management and later exit through a sale or public offering. A growth fund may instead make a minority investment to finance expansion.