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LegalLingo: What Is…Private Capital? – Corporate and Company Law



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Being an aspiring commercial lawyer often means being confronted
by complex, often abstract, concepts – which can result in students
and trainees being faced with jargon that can be difficult to
understand. We’ve therefore introduced LegalLingo to break down these concepts into
bite-size explanations to make the industry more accessible for
aspiring lawyers.

Up next in the series is an explanation of what private capital
is:

Most people are comfortable with the term ‘private
equity’. Firms like Bain Capital, TPG and Advent in the US and
3i, Bridgepoint and Cinven in the UK have been investing money in
businesses, developing them and selling them on for decades. But
private equity and venture capital are just part of a wider private
capital universe. It is an area of finance that has been around
forever, but has become increasingly commented on in the last
couple of years.

The term ‘private capital’ refers to investments in
unlisted assets, often (but not always) by private pools of money
such as buyout firms, sovereign wealth funds, private investment
funds and wealthy investors. Institutions with a long-term view,
such as pension funds and university endowment funds are also
active in the market (either via direct investments or through
investments in funds), as are banks.

The distinction between private capital and private equity is
that the former is the umbrella term for all types of investments
in unlisted assets. This includes private equity (investments in
private companies and/or buyouts of public companies), but also
encompasses venture capital (investments in early stage companies
with high growth potential), real estate (investments in real
estate assets), private debt (debt investments that are not
publicly traded), infrastructure (investments in infrastructure
assets) etc.

Want to find out more about private capital? If so, here are
links to three excellent articles on the subject:

If you found this helpful, why not check out the other
LegalLingo posts on our website? We’ll be adding to it regularly
so keep an eye out for them.

Originally published 12 July 2022

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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