Why invest in Private Equity?
During my 30 years in the banking and financial sector and especially then with asset management, I have had the privilege of meeting many wealthy customers over the years who have usually had an entrepreneurial background and who later became investors.
They have sold their company, many times their life’s work and want to find alternatives for their capital. What I have helped with is to think about capital preservation, ie good spread between asset classes with a healthy risk profile.
The entrepreneur has often taken great risks during his journey and now has a capital that is important to keep intact with some hope of growth but with balanced risk. So when I build portfolios, it’s in the back of my mind. Many of the customers I have had want to invest in alternative investments and then in private equity.
What then is private equity?
By definition, it is investments in unlisted companies’ equity capital. Through active ownership, where both knowledge and capital are invested in the companies, long-term sustainable companies are built. Private equity is needed for small entrepreneurial companies to be able to develop and grow.
It should be added that this alternative investment often does not correlate with the stock market, economic situation as it is an investment for several years. It is obviously a higher risk as the new unlisted company is not yet a new ex Spotify and may never be. It is also not an exchange-traded share, which makes it more difficult if you want to exit your investment. Therefore, it is important to diversify your portfolio and perhaps invest about 10-15% of your portfolio in unlisted.
With that in mind, I have a valuable understanding for both investors and entrepreneurs about how difficult it is to find the right company / capital. Here we at Enablers of Sweden come into the picture. With our combined expertise, experience and selection process, the investor has an even greater opportunity with a successful and successful alternative investment in Private Equity.
Read more about our selection process here on our website and how the investor can achieve an optimized dealflow.