The old school way to close that deal in private equity

DURING the last few years, private equity as an asset class clearly benefited from a low interest rate environment and attracted a high inflow of new capital. Investors eagerly looking for high returns turned their attention to private equity and increased their commitments to this asset class.

Temasek and GIC are seasoned private investors and allocate part of their capital into private equity investments. Thus, all Singaporeans do have an indirect exposure to this alternative asset class.

The traditional private equity model works along the lines of a general partner raising and managing a fund, which in turn invests its capital into a range of different portfolio companies. The capital is committed by investors, so called limited partners, for up to 10 to 12 years. Typically, you have to differentiate between venture capital funds, which focus on young and fast growing companies, and buyout funds, which acquire more mature and stable corporations.