Policy Memos

Russian Private Equity: An Opportunity for which the Time Has Not Yet Come

Policy Memo:

272

Publication Date:

10-2002

Author(s):

Description:

Private equity is a relatively common investment discipline in many Western countries and is an asset class that, over the years, has become an important component of many institutional portfolios. It refers to investments in private companies in the form of venture capital or leveraged buyouts (LBOs). Venture capital is risk capital for starting, expanding, or acquiring private companies and is important for the growth of any economy. LBOs refer to the purchase of generally established and cash flow–positive companies using only a small amount of equity and paying for the rest of the acquisition with debt financing. In addition to venture and buyouts, private equity encompasses privately issued defaulted debt, mezzanine (junior debt), funds-of-funds, and secondary purchases. In this memorandum, the term private equity will be used primarily to refer to venture capital and debt financing. Buyouts and other categories of private equity are rare in Russia and are not the focus of this analysis. [...]

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