Private markets

Private equity (PE) is the asset class of equity and equity-like investments in unlisted companies, or companies being taken private, usually made through closed-end funds run by a general partner and realised through a sale or listing.

Venture capital (VC) is equity financing for young, high-growth private companies, usually provided through closed-end funds in exchange for minority stakes, with fund returns driven by a small number of very large exits.

Private credit is debt financing provided by non-bank lenders, such as private funds, business development companies and insurers, through loans or debt instruments that are privately negotiated and not issued or traded in public markets.

Real estate as an asset class is investment in land and buildings, or in loans secured by them, to earn rental income and capital appreciation, held directly or through funds, joint ventures, real estate investment trusts (REITs) and debt vehicles.

Infrastructure investing is owning or lending to long-lived physical assets and networks that deliver essential services, such as transport, energy, water, communications and social facilities, whose revenue is usually set by regulation, long-term contracts or government concessions.

Secondaries are transactions in which existing interests in private funds, or assets held by those funds, are sold or restructured before the underlying investments are realised; the market divides into LP-led and GP-led transactions.

Alternative investments are assets and strategies outside the traditional sleeves of listed equities, investment-grade bonds and cash, most commonly private equity, venture capital, private credit, real estate, infrastructure, natural resources and hedge funds.

A hedge fund is a pooled investment vehicle, typically private and open-ended, whose manager pursues flexible trading strategies using short selling, leverage and derivatives, charges a management fee and a performance fee, and offers periodic, restricted liquidity.

A limited partner (LP) is a member of a limited partnership whose liability is limited to its agreed contribution and who does not manage the partnership; in private markets the term is used for any investor in a private fund.

A general partner (GP) is the partner of a limited partnership that manages and controls it and bears unlimited liability for its obligations; in private funds it is usually a sponsor-controlled special-purpose entity that receives the carried interest.

A management company is the sponsor's operating entity that employs the investment team, manages or advises the sponsor's funds under contract and receives the management fee; it is usually the registered investment adviser or authorised fund manager.

An institutional investor is an organisation that invests a large pool of capital under a formal mandate for others (pension members, policyholders, a charitable mission or a state), such as a pension fund, endowment, foundation, insurer or sovereign wealth fund.

A family office is a private organisation that manages the investments and often the wider financial affairs of one wealthy family (a single-family office) or of several (a multi-family office); it is a kind of allocator, not a legal form.

Assets under management (AUM) is the value of assets a manager manages for clients; its measurement depends on purpose, and in private markets it usually counts uncalled capital commitments as well as invested value.

The illiquidity premium is the additional expected return investors require, or are hypothesised to earn, for holding assets that cannot be sold quickly or without a material price concession, such as interests in private funds.

The J-curve is the typical pattern in which a closed-end private fund's cumulative net cash flows and interim returns are negative in its early years and turn positive as investments mature and are realised.

A fund's vintage year is the year used to group it with comparable funds for benchmarking and portfolio planning, usually the year of its first capital call or of its first legally binding close; conventions differ.

A co-investment is a minority equity investment made directly in a specific portfolio company alongside a private fund sponsor's main fund, typically offered to the fund's LPs or other partners on reduced or no management fee and carried interest.