The formulas, tricks and trade secrets of Private Equity

Types of Investors

Sample Chapter

Someone recently asked me what type of investors we have in our fund; that is, are they mostly pension funds, institutions, individuals, etc. Although I had a vague idea, it sparked the idea for this post. So, I went through our investor register, talked to a few other GPs and LPs, and came up with the following list of potential investors in a private equity fund:

  1. Company pension funds: a fund managed by a company to fund pension payments for its employees.
  2. Government pension funds: a fund managed by the government and invested in by various employees.
  3. Sovereign wealth funds: state-based funds that invest a nation’s surplus for long-term growth.
  4. Endowment funds & similar: used to support an organisation with its financial growth & income.
  5. High-net-worth individuals: people with a high personal wealth.
  6. Insurance companies: much of their profit is derived from investing the float.
  7. Investment banks: non-traditional banks that look to outperform through higher risk activities.
  8. Non-financial companies: any other business looking to invest a surplus for a moderate return.

Fund raising is all about contacts, marketing and reputation. The investor constituency will reflect the areas of capital raising strength in the team. Some funds benefit from friends at large institutions, some are supported by religious contacts, some are even just anchored by one major wealthy individual. These are the types of investors in private equity funds.

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