For most investors, that exposure is best achieved through professional management. While concepts such as crowdfunding are making it easier for more investors to put money directly into privately-owned businesses, investing this way is high risk – most investors lack the expertise and time necessary to be confident of making a success of such strategies.
Professional investors in private companies include the large limited partnership funds, as well as smaller tax-efficient vehicles such as venture capital trusts, but the downside is often a lack of liquidity.
By contrast, the listed private equity sector offers a more liquid exposure to exactly the sort of businesses now so well placed to benefit from economic recovery. The sector’s funds are run by professional private equity managers who are able to work with businesses to exploit their potential and to provide investors with well-managed and diversified exposure to ambitious growth-oriented companies. That is a compelling story, particularly in the current economic climate.
Shaun Middleton is managing partner of the Dunedin Enterprise Investment Trust
