When the GP identifies suitable investments for the fund, LPs are asked to contribute capital. This process is known as a capital call or drawdown. The GP makes investments in portfolio companies during the first four to six years of a fund term. During this period, the GP seeks to invest in eight to 12 portfolio companies and every time a new investment is about to close, the GP will send LPs a separate capital call.
Private equity or PE is a form of equity investment in companies that are predominantly not listed on any stock exchange. Capital for private equity is raised from institutional investors and high-net worth individuals, and it can be used for funding start-ups to develop new products and technologies (venture capital); financing organic growth and acquisitions (growth capital, buyout) strengthening balance sheets (special situations); or as Singapore investors are more familiar with to develop, manage and exit a property. CapitaLand Investments (CLI) and Mapletree Investments both have private equity funds focused on various property asset classes. CLI is one of the top 10 globally and the third best-performing year to date, according to Bloomberg. Back in 2014, City Developments’ (CDL) profit participation securities (PPS) was a private equity offering with a couple of partners.
Private equity investments are typically made by private equity funds through a fund partnership that has a closed-ended structure with a certain fund term. Many private equity funds have a life of 10−12 years. Private equity funds are typically structured as limited partnerships, where the private equity manager has the status of a general partner (GP) and the investor serves as a limited partner (LP).
