Private equity (PE) refers to ownership stakes in companies that are not listed on public stock exchanges. PE firms raise capital from institutional investors (pension funds, endowments, family offices) and deploy it to acquire, improve, and eventually sell companies for a profit.
The main strategies include leveraged buyouts (LBOs), where firms use debt to acquire mature companies, and growth equity, where firms invest in fast-growing companies without taking full control. Notable PE firms include Blackstone, KKR, Apollo, and Carlyle.
Many of the world's billionaires built their fortunes through private equity, either as firm founders (Steve Schwarzman, Henry Kravis) or through successful exits of PE-backed companies.