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What is a PE fund? - Coggle Diagram
What is a PE fund?
Life cycle of a PE fund
Capital raising
This stage of the life cycle involves sourcing institutional investors or wealthy investors to invest large sums of money into a fund
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Once this phase has closed, no new investors are permitted
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Exiting
Generally PE firms do not seek to hold on to investments indefinitely and look to dispose all of the investments held in a fund portfolio in order to return capital to investors plus a return and having hopefully made a profit in the process
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Business opporutnities
Classically PE firms exist in order to identify specific business opportunities which will increase their portfolio, generate high yields for investors and obtain strategic business advantage
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Investment schemes funded through pooled capital obtained from institutional investors such as pension funds and insurance companies and HNWI
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Funds remain active for set periods of time in order to generate returns for the investor, commonly referred to as the internal rate of return
When one fund is approaching its agreed close date it is generally followed by a new fund, facilitated by a new period of capital raising (the stage of the lifecycle that involves sourcing institutional investors or wealthy investors to invest large sums of money into a fund)
Organised PE through the establishment of pooled investment vehicles and the management and advisory services provided by focused specialised has grown from the middle of the 20th century, originally in the form of VC and then as PE from the 80s onwards