Stage 1
Venture Capital
Represents investments in early-stage companies with an idea for a new product or service.
The appeal of private equity
Strategy execution
- Long-term perspective (e.g., three-to-six years)
- Information advantage
- Strategic plans can stay private
Value creation
- Partner with company leadership to execute strategic plans to generate organic growth
- Make strategic acquisitions, take board seats and develop new products and service lines
- Depending on PE stage, act as a mentor to help build out management teams
Availability of capital
- Private equity firms are critical partners for companies to provide capital
- Leverage their network to identify opportunities
- Provide human capital as businesses mature
Knowledge Hub
Insight
Private Markets Insights: Private Equity Secondaries - A primary allocation
The global secondary market has grown over the past three decades primarily because of the increased supply of capital committed to private investment funds, according to Lexington Partners. They believe the backdrop for the secondary market continues to remain attractive.
Course
Franklin Templeton Alternatives Education
Earn CE credit while exploring the opportunities with private equity, evaluate its stages (venture capital, growth equity and buyout) and examine why the current market environment requires a different playbook.
Insight
Unlocking opportunities: Understanding the growing secondary market
Secondary funds, commonly referred to as secondaries or continuation transactions, purchase existing interests from limited partners (LPs) or assets from primary private equity fund investors.
Insight
Comparing evergreen and drawdown funds: Three considerations for private equity investors
The rise of evergreen funds in private equity is providing wealth managers with new allocation opportunities and encouraging investors to evaluate the impact of fund structure on potential portfolio outcomes.
Investment Risk:
Private equity investments involve a high degree of risk and are suitable only for investors who can afford to risk the loss of all or substantially all of such investment. Private equity investments and vehicles that invest in them should be considered illiquid and their performance may be volatile. There can be no assurance that any investment will be adequately compensated for risks taken. The timing of profit realization, if any, can be highly uncertain. Investments in private securities and obligations may be thinly traded, have no ready market or exchange and require private negotiation, and which may be restricted as to their transferability. These factors may limit the ability to sell such securities at their fair market value.
1. The “J-curve” is the term commonly used to describe the trajectory of a private equity fund’s cashflows and returns. An important liquidity implication of the J-curve is the need for investors to manage their own liquidity to ensure they can meet capital calls on the front-end of the J-curve.
2. Blind pool risk is derived from investors in a new (“primary”) private equity vintage that are investing in a relatively blind pool of assets. Secondary investors help eliminate this by investing in identifiable assets.
Important Information
Most funds offer multiple share classes. Share classes are subject to different fees and expenses, which will affect their performance.
Certain share classes are only offered to eligible investors as stated in the prospectus. Different minimums may apply to clients of certain service agents. All classes of shares are not available through all distribution channels. See the Fund's prospectus for additional information.
CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute.
Indexes are unmanaged and one cannot invest directly in an index. They do not reflect any fees, expenses or sales charges.
Important data provider notices and terms available at https://www.franklintempletondatasources.com/
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Investors should carefully consider a fund's investment goals, risks, sales charges and expenses before investing. The prospectus contains this and other information. Please read the prospectus carefully before investing or sending money.
Franklin Distributors, LLC. Member FINRA, SIPC. All entities mentioned are Franklin Templeton affiliates companies. Prior to July 7, 2021, Franklin Templeton Distributors, Inc., and Legg Mason Investor Services, LLC served as mutual fund distributors for Franklin Templeton. Investment Products: NOT FDIC INSURED | NO BANK GUARANTEE | MAY LOSE VALUE. Reports and other information about the fund are available on the EDGAR Database on the SEC's Internet site at https://www.sec.gov/
