Private equity can be defined as financing secured through the sale of shares that are not listed on a public trading platform like the JSE. Therefore, it is when someone or an entity with a high net worth invests in a company with the goal to either secure part ownership through private shares.
An example of this would be a pension fund that invests privately in various companies to grow their own net worth. There are also firms that specialise in this, and individuals with money to invest can become an accredited investor with them. In some cases, private equity also refers to when a company is delisted from the stock exchange.
In South Africa, private equity is not subject to a single regulatory board but instead, it is governed by a variety of regulatory frameworks and legislation. Some of the most prevalent ones include:
- The Companies Act 71 of 2008.
- The Takeover Regulations
- The Competition Commission and their stance on antitrust actions
- The Collective Investment Schemes Control Act of 2002
In order to understand the nuances of investing in private equity and how it is managed it is always best to consult with a financial lawyer. They will be able to advise you on the best choice for your capital or company – especially when it comes to the debate between private and public shares.
To talk to a financial lawyer about the possibility of private equity investment, why not reach out to us and we will refer you to the right person for the job. Whether you are a company looking to raise funds, or an investor in search of new ventures, let us assist you.
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