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WHAT IS PRIVATE EQUITY?

By definition, we are considering long-term equity investments in private or closely held firms. Typically either start-ups or mature firms (Buyout) receive funding from Private Equity firms. Past examples of firms that have received Venture Capital financing include Apple, Facebook, Google, Skype, Stepstone and Spotify. Firms that have received Buyout funding include RjR Nabisco and Kongsberg Automotive.

Private Equity (PE) works as an alternative source of capital for firms. One main difference is that a firm pays a dividend rather than interest to a bank. Also, shareholders receive voting rights on the firm’s shareholder meeting. However, in particular in VC financing, investors often do not buy the whole firm or even hold a majority in the firm’s shareholder meeting.

An article by Carsten Bienz, "Bedre Enn Sitt Rykte" ("Better than its reputation") was published in Dagens Næringsliv (DN) in January 2015. This article explains some of the common perceptions of private equity. The article can be found here (in Norwegian). Another article, written by Carsten Bienz and published in Dagens Næringsliv (DN) in July 2014, asks why Private Equity funds are so controversial and why we need them. The article is called "Vår tids mørkemenn: Er aktive fond kreativ ødeleggelse?" ("The Dark Men of Our Time: Are Equity Funds Creative Destruction?"), and can be found here (in Norwegian).