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Guy who works in the PE market here (not a PE shop myself) - this comment is correct.
by mbesto 7mo ago
Guy who works in the PE market here (not a PE shop myself) - this comment is correct.
- meetingthrower 7mo agoCorrect. One niggle in that PE can access private credit as part of the capital stack. One flavor of debt in the ice cream store.
- refurb 7mo agoIf you work in a PE shop you’d know it’s not riskfree and that the PE firm also puts their own money up plus money raised through LPs (hence “leveraged”)
- mbesto 7mo agoNot sure your point, but... > PE firm also puts their own money up plus money raised through LPs (hence “leveraged”) This is not true. PE firm individuals put their own money in a fund, which also has LPs money. That fund is used to acquire businesses and in order to fund a transaction they use both equity (capital from that fund) and debt (loans from banks) to fund the transaction. The debt is the "leverage" part of the equation...hence leveraged.
- refurb 7mo agoMy point is that it’s certainly not risk-free which was the claim of the comment I replied to.