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What is Private Equity?
Private equity refers to professional investment activities focused on unlisted companies. Private equity investors make investments in both early-stage startups and established, larger businesses. In exchange for their investment, private equity investors receive either a majority or minority stake in the company. The goal of private equity investing is to accelerate the company’s growth.
Private equity investors are active owners, and the advantages of this approach compared to other forms of financing include a professional approach to growth and the expertise and contacts that the investors bring to their portfolio companies.
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What do Private Equity investors do?
Private equity managers raise funds from a range of sources, including institutional investors like pension funds and insurance groups as well as private investors. They invest these funds in promising companies in return for shares in the company and actively contribute to the growth of their portfolio companies during their ownership.
Private equity investors are always temporary owners, and typically sell their ownership interest after a period of 3-7 years, after which the company advances to its next growth stage. This may involve partnering with a larger investor, going public, or becoming part of a larger international corporation.
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What is the impact of Private Equity?
Private equity investors often foster innovation, either by developing traditional industries or backing entirely new technologies. Investors provide capital and expertise for businesses, giving them the tools they needed to grow and prosper.
Expanding businesses also often generate new jobs, contributing to economic growth. When the investor sells their stake in a company that has seen growth and increased value, the returns generated benefit pension funds, foundations, and other fund investors.
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How does private equity differ from other forms of financing?
Private equity is characterised by professional, active ownership. Beyond financing, private equity investors are directly involved in developing their portfolio companies, often through board work. They contribute to activities like shaping strategies, helping with key recruitments, and fostering international connections.
Testimonials
Daan De Wever | Destiny
Daan and Samuel De Wever were just shy of thirty when they founded their own telecommunications company, called Destiny, in 2008. Destiny provides telecommunications services and cloud solutions to the business world, to small and large companies. The De Wever brothers have plenty of ambition and appetite. Being a challenger for the big players on the Belgian market? Why not? Gladly even. Rolling out a European strategy in the long term? Most certainly. “But you need to get other financial partners on board in every growth phase.”
Didier Depreay | Point Chaud
Domestically, the Liège retail group Point Chaud has been growing nicely for a quarter of a century now. Today the company of founder and CEO Didier Depreay (56) helps consumers satisfy their hunger for quality rolls and various pastries at over fifty locations.
BNP Paribas Fortis has supported the business side of things since 2014. “A real win-win situation”, according to Didier Depreay.
Fabrice Brion | I-care Group
The I-care Group from Mons, Belgium, is a company that has achieved a global leader position in ‘machine health’ in less than two decades. The way in which CEO Fabrice Brion accomplished this is rather unique. In addition to capital injections from the Wallonian public investment company SRIW and IMBC, he gave employees the option to buy into the company, contributing 10% of the capital. ‘There’s no better way to motivate employees to do their very best in their jobs and for the company,’ says Brion.