Types Of Investors In Private Equity Sector

The field of private equity investment is an elaborate one which requires extensive knowledge and experience to effectively navigate without losing the way and vision. Primarily, every investor needs to know about the two asset classes that exist within the market—public sector and the private sector. The public sector is openly available to the general public and open to investments from all, and if an investor has the right amount of money, they can invest their money to a certain limit in a company. The private sector, on the other hand, is not openly available to a common man. Commonly known as the alternative asset class, private sector includes various kinds of assets within it, namely private equity.

India has a huge private equity sector for investments. The primary reason why these assets are held in such high regard is the fact that they generate high returns in less time. In order to cope with their expenses and expansion plans, every business requires investors from both the asset classes. Each of these classes works in a unique way, but more importantly, there are also various kinds of investors working in this area. Here are a few of the investors that one should know about:

Institutional Investors:

Institutional investors work for a private equity firm that invests in equity and various different kinds of funds. These types of investors do not invest money from their own pocket, but they do not restrict themselves to just providing the capital. Along with that, these investors are also involved in the management, administration and general overhaul of how the company works.

Leveraged buyout investors

They typically buy the controlling stakes alone or in partnership with other PE firms. Most Private equity funds in India find it the most secure method to invest money as they usually invest in companies with a stable cash flow. Yes, this does involve, taking up the little bit of loan but it is worth it as the risk factor is reduced due to the involvement of multiple parties.

Angel Investors:

The name is self-explanatory. It tells us what kind of investors they are, that is, like angels for a businessman. Unlike institutional investors who invest the firm’s funds, angel investors invest their own funds into a company. These are usually wealthy individuals who are looking to make profits by investing in companies with the huge potential to succeed but don’t have the funds to function efficiently and generate revenue.