What is the primary purpose of private equity investment?

The primary purpose of private equity investment is to invest in private companies or purchase shares in public companies with the intention of delisting. This approach enables private equity firms to take advantage of opportunities to improve the operations and profitability of the companies they invest in without the constraints of public market pressures.

Private equity investors typically seek to acquire a significant ownership stake to implement strategic changes that can enhance the company's value over time. This may involve restructuring management, streamlining operations, or investing in new technologies and markets.

By targeting companies that are not fully capitalizing on their potential or that may be undervalued, private equity investments can drive substantial returns upon exit strategies such as sales or initial public offerings (IPOs). This aligns with the overall goal of maximizing returns over a longer-term investment horizon.

Other options presented do not accurately capture the primary focus of private equity investment:

• Investing in publicly traded companies only does not fit, since private equity specifically targets private entities or seeks to privatize public companies.

• Operating public infrastructure projects falls under a different category, typically involving public-private partnerships, rather than private equity investments.

• While providing loans to private firms is a legitimate form of financing, it does not encompass the equity ownership and management control that characterize typical private equity