Listed Private Equity: Definition

Listed private equity companies are publicly traded vehicles that generally invest capital in privately held businesses. They may also take positions of significant influence and/or control in publicly traded businesses. The model and structure can be similar to those of traditional private equity funds, except that listed private equity companies are publicly traded in the open market. Simply stated, listed private equity is a different approach to accessing the same asset class. Some common characteristics of listed private equity are:

Listed private equity is an ownership interest in a set of investments that are traded in the open market on recognized financial exchanges every day. These ownership interests are no different than what an investor in a traditional private equity partnership might hold; investments in a set of businesses with the objective of maximizing total return at the end of an investment period.
Listed private equity vehicles are structured as common equity (or shares), units in investment trusts or units in publicly traded limited partnership interests.
Listed private equity vehicles typically take the form of direct private equity investments, fund of fund private equity investments (both primary and secondary fund interests, along with their future funding commitments) or an interest in the management company that oversees various investment funds/business units. Listed private equity vehicles can also be some combination of the above, or a hybrid.
Listed private equity is a permanent pool of capital. Once raised, the capital of a listed private equity vehicle is recycled from one deal to the next. This represents a significant difference in the business model for a private equity manager and offers options not available through traditional limited partnerships.

A listed private equity company may also offer traditional limited partnership-based funds that they manage alongside the listed private equity vehicle. In this instance, the private equity company is investing both the listed private equity vehicle’s capital along with the limited partnership-based fund’s capital in the same deals or businesses, at the same time, on the same terms, thereby leveraging the deal flow, due diligence and ongoing work of the private equity managers for the benefit of both vehicles.
Listed private equity vehicles can be structured to focus on senior loans, mezzanine debt or secured/unsecured debt investments. In some cases, a private equity manager may have a listed private equity vehicle that focuses on the debt side of the capital structure along with a traditional limited partnership-based fund(s) that invests in the equity side of a deal. The listed private equity vehicle may invest in the senior loan, mezzanine debt or secured/unsecured debt in a deal while the traditional limited partnership-based fund(s) invests in the equity side of the same deal.