The motivation and challenges of investing in Private Equity

Why investing in Private Equity? The primary motivations for investing in Private Equity include:

  • Access to a diverse array of investment opportunities not available in public markets.
  • Robust & high long-term return potential.
  • Historically proven resilience during market downturns.
  • Diversification benefits, allowing investment across a broad spectrum of industries.
  • Support for the foundational SMEs, contributing to economic stability.
  • Access to high-quality investment opportunities.
  • Mitigation of risk through diversification, avoiding direct exposure to public market volatility.

What are the biggest challenges with investing directly in Private Equity for Private Investors?

The main challenges for private investors in direct Private Equity investment include:

  • Limited access, with superior private equity firms often exclusive to large financial institutions, such as Asset Managers, Pension Funds, and select individuals.
  • Long-term commitments, as investors commit to providing capital to fund managers for durations typically spanning a decade (10yr), with potential extensions.
  • Unpredictable Capital Calls, involving the collection of funds from investors whenever the need arises.

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