Private equity Vs Buyout funds

CFA Level III
#1

Hi, 1. I am confused between these two categories of alternative investments. I feel that Private Investment in Public Entities (PIPE), a subgroup of Private Equity, is the same as buyout fund. 2. Also Schweser notes say : indirect investment is usually done through private equity funds, which include venture capital and buyout funds. (?) Can you please shed some light? Thanks, MG.

#2

buyout funds is one type of private equity like chesty brunettes is one type of female there are many types, and you should dabble a little in each to become properly diversified

#3

these types…they must have long long term horizons not too many unique circumstances plenty of liquidity (oh no he di-int?)…yes I did

#4

Buyout = “Look at Larger co. that’s public… let’s take it private and make a killing doing it” Venture = “These guys have a good idea with these widgets, let’s invest with them and exit when they go public in about 7 years” PIPE = “Are you kidding? THe gov’t is running this toll road like garbage, we’re going to buy them out and run it better than they ever did before and make a killing doing it”. Direct in venture = “Hey new tech, here’s a commitment for a couple million and a few hundred thousand up front… good luck?!” Indirect = “Ok let me get this straight Mr. Venture Capitalist, your going to pool your money with our’s and invest in a bunch of start ups and make us a killing doing so. I’m so in”.

#5

the last two I don’t recall seeing those in stalla or CFA book. can you refer the page number. thanks.

#6

thanks guys.

#7

is indirect preferred stock?

#8

no, direct is preferred stock. inderect you become a partner in LLC IMHO

#9

Direct can be preferred or any other direct ownership in teh company. Indirect is when you invest in a PE fund or similar structure so you are investing through the PE fund. Think of it as Direct Real Estate is to buying a House as Direct PE is to buying a majority stake in a company and Indirect Real Estate is to buying a REIT as Indirect PE is to investing in a PE fund.

#10

angel investors would be the typical direct venture capital investors. a PIPE is a private placement by a publicly listed company (not an infrastructure investment).

#11

i hate all this SH!T the most…