What's going on?

Private equity firms have had their busiest-ever start to a year, inking more than $500 billion in deals around the world across the first half of 2021. And you�re invited to join the fun�

What does this mean?

Investors park their cash with private equity firms in the expectation that they�ll go out and either buy large stakes in private companies or take over public ones and delist them from the stock market. The hope is that after a few years of tinkering with a company�s operations and financials, they�ll be able to sell the business on for a profit.

Ultra-low interest rates have made private equity�s promise of solid returns more popular than ever � helping firms amass a mountain of investor cash. And since private equity deals almost always involve huge chunks of debt, low rates have also created the perfect environment for them to get busy buying.

Why should I care?

For markets: Public service announcement.
Private equity firms are rushing to buy up companies � but several are simultaneously looking to list themselves on stock markets. California�s TPG Capital and Britain�s Bridgepoint Advisers are both considering selling stakes in initial public offerings (IPOs), apparently drawn by the historically high valuations investors are currently willing to pay for stocks. But that could be a warning sign. Private equity giant Blackstone listed in June 2007 � right before the crash that eventually saw the US stock market fall 60%.

For you personally: Pick up a private number?
While investing directly in private equity funds remains restricted to the very wealthy, shares of dozens of firms are now publicly available. Some have proved hot tickets: Sweden�s EQT has risen 270% since listing in 2019. But an exchange-traded fund (ETF) tracking the performance of 50-odd firms worldwide hasn�t proved so dazzling. It�s fallen 39% since its inception in October 2006 � while global stock markets have more than doubled.