Frequently Asked Questions
The term private investment refers to the act of investing in the ownership or interest of an entity that is not publicly listed or traded. Usually, this is done by high net worth individuals or firms, by purchasing stakes in private companies. Another common form of private investment is the act of gaining ownership or interest in a public company, with the intention of removing them from the stock exchanges.
Here are some examples of private investments;
- Investments in hedge funds,
- Oil and gas ventures,
- Real estate syndicates,
- Limited partnerships,
- Private investment partnerships,
- Private placements,
- Private equity funds
- Any other similar investments.
Some of the risks associated with private investments are;
- Information about the company is not publicly available and will require extensive due diligence
- Acquiring, growing, and selling the business may present more challenges without a public track record
- Lack of liquidity. Due to the private nature of the investments, it is difficult to get out or sell.
Private investments can improve an investment portfolio in these ways;
- Potential for higher risk-adjusted returns
- Greater diversification
- Acquisition of private assets
- Higher flexibility
- Ability to invest in a wide range of industries
One key factor to determine suitability when considering private investment, is the experience and ability of your investment manager. If you decide to go with an investment firm/bank, choosing the right one will go a long way in helping you decide which investment is the best for your needs.
Other factors to consider are the track record, potential, market opportunity and capacity for value creation.