Intrinsic characteristic of pe investments

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Let's take a moment to consider the reasons why private equity (PE) is financed this way. Imagine you are starting up a new PE investment fund. You, as a general partner (GP), intend to raise $300 million. With that fund, you plan to invest in companies that you have identified and researched. After these investments are exited, you will distribute returns to your limited partners (LPs). These distributions are unlikely to happen for several years. In other words, the LP capital is locked with the fund for many years.

Why do you think this illiquidity is an intrinsic characteristic of PE investments?

Reference no: EM132534679

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