In recent years, we’ve noticed a shift in the type of investors and clients that come to us.
Private equity is no longer only accessible for high net worth individuals, but for any individual investor who has a moderate sum of money. This sector is known in the industry as the ‘retail market’, and has developed into a growing source of investment in recent years.
At Berkeley Assets one of our priorities is to promote transparency within the finance sector. To demonstrate this and support less-experienced investors we have translated some commonly used private equity phrases into plain English, to help navigate any initial investor discussions.
This is the first in a series of scenarios we will explain so be sure to check back on the blog for more updates.
Example Scenario: A potential investor is researching private equity opportunities that are backed by tangible assets. After conducting due diligence on a number of firm’s portfolios, the retail client confirms their selection based on the firm’s assets under management and capital raising experience.
Assets Under Management (AUM) – This refers to the total market value of assets a firm manages, it is a key indicator of the size of the firm.
Capital Raising – This refers to the actions a company takes to raise new finances in order to help the daily operations of the business. Capital can come from investors or venture capital sources.
Due Diligence – Investing successfully in private equity at a fund or company level, involves thorough investigation. It is essential to review and analyse all aspects of an investment deal before signing.
Portfolio – A private equity firm will invest in several companies, each of which is known as a portfolio company. The spread of investments into the various target companies is referred to as the portfolio.
Private equity - This refers to the holding of stock in unlisted companies – companies that are not quoted on a stock exchange.
Tangible Assets – Anything owned by an individual, a business or financial institution that has a present or future value i.e. can be turned into cash. Tangible assets can be land and buildings, fixtures and fittings.
Contact us if ever you want to talk in plain English about what investment options we can offer.
Justin is a practicing chartered accountant in the UK and the UAE and a member of the Institute of Chartered Accountants in England and Wales(ICAEW). Based in the Dubai Office, he assists in developing Berkeley’s operational corporate strategy, with a focus on retail clients.