{"id":177148,"date":"2022-10-15T13:23:50","date_gmt":"2022-10-15T12:23:50","guid":{"rendered":"https:\/\/legalvision.co.uk\/?p=177148"},"modified":"2022-10-21T04:59:39","modified_gmt":"2022-10-21T03:59:39","slug":"private-equity-limited-partners","status":"publish","type":"post","link":"https:\/\/legalvision.co.uk\/corporations\/private-equity-limited-partners\/","title":{"rendered":"What are Private Equity Limited Partners in England?"},"content":{"rendered":"

As a business, you may come across private equity funds. Private equity firms invest private funds into companies that they believe will become more valuable in the future. Within this context, you may hear of the term ‘limited partners’ (or sometimes referred to as ‘LP’). Private equity limited partners play an important role in investing in the fund that the private equity firm uses to acquire businesses. If you are dealing with private equity firms, you may find it useful to understand the role that a limited partner plays. This article will explain what a limited partner is and what they do.<\/span><\/p>\n

What is Private Equity?<\/span><\/h2>\n

Private equity firms are companies that deal with private equity funds. A private equity fund is typically a closed-off fund. It usually involves investment from a number of high-net worth individuals and institutional investors (such as banks).\u00a0<\/span><\/p>\n

A private equity fund will usually use the capital that it has raised to invest in a target company. The aim is to build diverse portfolio of companies. Since the private equity firm will fundraise from a range of different investors, they can often raise very large amounts of capital.\u00a0Usually, private equity funds invest in private companies, as opposed to companies that have been listed on a public exchange. The fund will then invest some of the money raised into the company itself. The ultimate aim is to help the company grow.\u00a0<\/span><\/p>\n

At the end of the investment period (usually between five and ten years), the private equity firm will aim to sell the company. The proceeds of the sale are then divided between investors within the fund.<\/span><\/p>\n

Private Equity Limited Partner Fund Structure<\/span><\/h2>\n

A private equity fund will have two types of partners.\u00a0<\/span><\/p>\n

The first is a general partner (‘GP). A general partner’s role is to manage the fund and pick the target companies they wish to invest in. Usually, the individuals in charge of the private equity firm will be the general partners in a private equity transaction. General partners are also responsible for the following tasks:<\/span><\/p>\n