The term 'private equity' refers to a specific type of long-term investment. It involves the provision of investment from investors (or limited partners, 'LPs') to finance and acquire equity ownership in private companies that are usually not quoted on a regulated market. The large majority of investors include public and private pension funds, endowments and foundations.
A private equity firm (known as general partners, or GPs) draw on the combined raised capital and borrowed funds, committed for a period of time (the investment period), and seek to invest this in companies which demonstrate the potential for growth in value and enhance their performance and value over a prolonged period. Typically, holding periods last between three and seven years.
Private equity transactions take many forms. Typical forms of private equity include venture capital, growth and mezzanine capital. CVC engages primarily in the large buy-out sector of the private equity market, with a focus on building and expanding businesses over the long-term, for the most part, holding investments for at least five years.
In contrast to the majority of institutional investors, private equity fund managers engage much more actively in the operations and strategic development of their portfolio companies and put considerable management efforts into supporting them.