PE clarification

Private debt isn't quite private equity now, is it?

awk

Check out this great article: http://en.wikipedia.org/wiki/Private_equity

Then read this other good one: http://en.wikipedia.org/wiki/Private_equity

Also my friend Goggles told me about this excellent written piece: http://en.wikipedia.org/wiki/Private_equity

After reading ALL 3 let me know what questions you have...

that's exactly what i'm confused about, seems like the answer is yes. However, most people here on previous posts seem to make a distinction between debt shop and PE firms.

One more time - ask yourself: Are equity and debt the same thing?

When you buy a car with cash down and financing, you are considered the owner with the car as collateral for the loan. PE firms buy a company and use the assets they are purchasing to secure a loan (debt) from other institutions. Optimus is trying to delineate the term financing and ownership for you, Debt vs Equity. You can buy equity with debt, but you don't consider the lender private EQUITY because they do not OWN anything.

yea I hear them get grouped together too by college kids.

Prudential has a massive 401(k) portfolio for employees and a number of other investment products for clients of theirs that forms this gigantic portfolio. With an 18 billion dollar portfolio or w/e they have the key for them will obviously be diversification. Therefore, they will allocate certain percentages to various asset classes (Domestic Equity 15%, Corp Bond 10%, Alternative Investments 15%, etc...)

Now my assumption has always been that they took this 15% or w/e that they allocate to Alternatives and invested it with external Private Equity groups (which I am positive that they do). However, it looks like you may have found an internal group/division trying to see if there is any success in competing in the PE market internally, which seems a little strange to me because that would suggest they are probably the sole investor in the 'fund'... which would certainly suggest a lot of risk exposure to any investments they made.

Otherwise it may just be like a second level of due diligence or an internal fund picking group. I'm only speculating but looks interesting, hopefully there was some content in this post that you didn't find painfully obvious.

http://www3.prudential.com/pcg/main/pru_cap_grp_main.html

here is their website

Pru capital does a lot of mezz debt, very little equity ownership and when they do, it's minority positions. You can technically say they do some private equity since they do invest in minority equity positions (warrants), but it's a stretch.

Private and mezz debt have some things in common with PE (private securities, often have access to non-public information, long-term hold strategy, often times the same draw-down/investing/harvesting fund life-cycle) but as pointed out it's not the same as PE.

There are firms out there that do both mezz and PE, though in seperate groups. There are others that do both within the same fund, advertised or not. Norwest is an example of the former, while Cyprium Partners is an example of the latter.

For the Norwests of the world, usually the seperate groups have seperate names (Mezzanine Partners, Equity Partners). For the firms that do both in the same fund, I think it's okay to call them PE.