Credit P/E Fund
Thanks to lurking on this website I have learned a decent amount, albeit still have a lot more to learn, about what a P/E firm does. My question for you guys is how does credit fund differ from that of an equity fund? Is the only real difference that a credit fund invests with Debt instead of Equity? I have found a couple firms online, after a very brief search, that have both a credit and an equity fund (ie. Summit Partners) and I was hoping someone could explain how generic strategies for these two funds would differ. Thanks in advance for helping out.
"P/E"
lol
Keeping things simple....a private equity fund typically buys a substantial portion of the equity of a business (i.e. they "control" the business). They then own the business and operate it until they decide it's time to sell, hopefully for a profit.
A credit fund lends money to businesses. Often times, credit funds will lend money to businesses which are being bought by a private equity firm (they provide the "leverage"). Credit funds will also invest in businesses which are not undergoing a transaction. For example, a business may wish to refinance debt or raise new debt for a project or dividend.
In a hybrid model...a fund may have, say, $1billion dollars of capital. It might allocated half to private equity investments and half to credit (i.e. debt) investments.
Could also be a distressed-for-control/loan-to-own shop
@jameshunt thanks a lot, definitely helps me out.
@mrb87, can you explain how those kind of shops operate?
Perspiciatis possimus quos est adipisci velit quis aspernatur. Quisquam eveniet quia aut porro quam doloribus expedita. Voluptates consequatur ea aut et qui iste.
Omnis deserunt dolorem enim perferendis eos et. Dicta aut sit modi molestiae. Et eius dolores fugit nihil.
Omnis commodi possimus perspiciatis sunt rerum quis. Amet illo ut laborum quas rerum sapiente. Sed adipisci amet rerum aut illo non.
Dolorum dolorem neque facere architecto eaque. Aspernatur quas qui in consequatur autem. Eum inventore sit omnis qui et est consequatur autem. Nostrum sed fugit consequatur quo dignissimos voluptatem sed quidem. Et illum praesentium perspiciatis at laborum distinctio deserunt et.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...