Hello,

Private equity (PE) investing experienced a surge in popularity following the Global Financial Crisis due to multiple factors. Chief among them were ultra-low interest rates, which made Leveraged Buyouts (LBOs) cheaper to finance. Investors seeking higher risk and higher returns flooded into PE funds, leading to an abundance of capital. However, activity in the private market has cooled down in recent years, with elevated rates forcing funds to be more conservative when dealmaking.

 

Due to a scarcity of publicly held information on private companies, PE investments are typically quite complex and require a specialist touch. Additionally, large sums of upfront capital are usually required when making an investment. For these reasons, PE has long been exclusive to institutional investors.

 

Now, innovations have begun to increase accessibility for retail investors. Well, sort of. Robinhood recently began selling stock ‘tokens’ in private companies such as OpenAI and SpaceX to European investors. However, Robinhood has received scrutiny from European regulators for the practice and from OpenAI itself, which issued a statement on social media where it warned that ‘“OpenAI tokens” are not OpenAI equity’ while asking investors to ‘please be careful’.

 

As always, if you wish to discuss anything in further detail, please do get in touch.