About private equity

How private equity invests in privately-owned businesses, supports jobs and creates prosperity.

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About private equity

The impact of private equity

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Private equity's contribution

Private equity investment helps create more successful businesses with stronger, more sustainable futures.

By significantly improving the financial performance of the companies it invests in, private equity plays an important role in Europe's prosperity. Healthier companies invest more in innovation, create more jobs and contribute more to economic growth.

When the time is right, private equity managers sell their investment portfolios. This generates attractive returns for the professional investors that ultimately back private equity funds, such as pension funds and insurers that use the proceeds to pay for the retirements of millions of European citizens.

 

Impact in numbers

Over the past few years, since the financial crisis, private equity has become an increasingly important source of investment for European businesses, and SMEs in particular. It is critical part of a more resilient and sustainable financing ecosystem across the continent.

€300bn

invested by private equity in companies located in the EU from 2014 to 2018

24,588

companies backed by private equity in the EU

84%

of which are SMEs

Impact for businesses

Helping companies grow

Private equity supports the ambitions of privately-held companies by providing them with:

  • Capital that they often can’t get elsewhere or is too expensive
  • Business expertise that has a track record of building successful companies
  • Active hands-on support from investors whose interests are aligned with management
  • The expertise, affiliations and contacts they need to expand (for example overseas or through acquisition)
  • Help for management seeking to buy themselves out or owners looking to exit

This support helps businesses become more successful and provides them with brighter, more sustainable futures. And when companies grow to the next level, they contribute to economic growth and create employment.

Ron Kalifa

Deputy Chairman

Worldpay

Independence and private ownership allowed us to become a global leader in payments through long-term investment in our technology, our people and our business. Quotation Marks Graphic

Impact for investors

Creating investment growth

There are a wide range of investors in private equity, but pension funds and insurance companies are among the largest and most important. They invest in private equity because:

  • They want access to privately-owned companies that are often more entrepreneurial and successful
  • Private equity has consistently been one of the best performing parts of their investment portfolios
  • Private equity helps them to diversify their portfolios and have a spread of investment types that deliver strong risk-adjusted returns

For most pension funds and insurers, private equity is part of an extensive investment portfolio. They are looking for strong investment returns for their beneficiaries – the people on the street with pensions or life assurance policies.

Swedish public pension fund executive
Private equity done in the right way provides excellent opportunities to get excellent returns. Quotation Marks Graphic

Impact for society

Creating prosperity and growth

By helping create better businesses, private equity has a profound impact on the social and economic fabric of Europe. The benefits include:

  • Actively encouraging innovation and entrepreneurship, helping people deliver their personal ambitions
  • Investment in privately-held companies at the forefront of innovation, creating services and products that enhance people’s lives
  • Helping to create and preserve jobs, and enabling people to develop skills in new areas and technologies
  • Driving significant economic growth
  • Creating tangible value – through real investment in real businesses, not artificial financial engineering
  • Helping companies overcome challenges and secure a more sustainable future, preserving businesses and the jobs and communities that depend on them

Private equity is an essential driver of European growth, employment, innovation, and economic and social prosperity.

In this section

How does private equity work?

What does private equity offer to investors?

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