The private equity market matches medium- to long-term capital with companies that are not quoted on a public equity market and which need financing to fund growth, development or business improvement. The capital takes the form of both equity and debt. The equity elements are typically provided by private equity funds, which in turn raise their capital from investors such as funds of funds, pension funds, investment funds, endowments and high net worth individuals. The debt is typically provided by banks, including investment, commercial and retail banks.
Large proportions of this debt are often distributed to other entities, either other investment, commercial or retail banks who were not the primary finance provider or institutional debt market participants. The private equity business model is not constrained to capital provision, rather it extends to the application of expertise and strategic vision to the privately owned companies.