Understanding the concept of private equity funds

Private equity (PE) funds are investment funds used to purchase companies or shares in companies.
PE funds are financed by high-risk investors ([Limited Partners (LPs)](/blog/decouvrez-ce-que-sont les-limited-partners-lps-dans-le-secteur-de-la-private-equity)) such as pension funds, sovereign wealth funds, institutional funds and private investors.

These funds are managed by professional PE fund managers ([General Partner (GPs)](/blog/decouvrez-ce-qu'est-a-general-partner-gp-dans-le-secteur-de-la-private-equity)) who seek investment opportunities through acquisition negotiations, equity investments, takeovers or majority stakes in companies.
PE funds aim to maximize their returns by investing in companies in order to improve them through its skills, expertise and resources. This may include restructuring a company, improving management, developing new products, acquisitions or mergers, developing markets and distribution channels, as well as securing appropriate financing.

The performance of PE investments is measured and compared with indices such as the S&P 500 and the Russell 2000, and returns from PE funds are generally higher than those of the indices.