PRIVATE EQUITY AND VENTURES

Private venture and capital capacity is an investment capital from high-net-worth investors or firms . The investors buy shares of the public companies and private companies, but if bought the shares of public companies is to gain control of the companies and turned the public companies into private companies. Meanwhile, a capital venture is an investor or financing that investors gave to the startup companies that have the capability to grow and generate more income. It also funds the company at an early stage. The capital venture can be in the form of knowledge, information, or expertise.

Islamic Capital Instruments	Private Equity and Venture
Definition	Private equity is a source of investment from investors that buy shares of private companies or public companies to turn it into private. Venture capital is financing given to a startup company that has the potential to grow.
Purpose	For investment purposes.
Characteristics and Features	The underlying asset The transactions’ structures itself comply with Shariah
Types	1-Venture Capital 2-Buy Out
Shariah Contracts /Elements	Mudharabah, Musharakah and Wakalah
Example	Creador Xeraya Capital Malaysian Venture Capital and private equity association (MVCA)

    

    The purpose of private equity and venture is mainly for investments. This investment can create more job opportunities and reduce the unemployment rate in Malaysia at the same time. Startup companies are the parties that gain the most benefit through the capital venture. They received help, support, and assistance from investors in order to develop and grow their companies. Funding the companies is the first step in private equity and venture capital. However, the investors would ask for something in return for their investment that would give them benefit. The difference between private equity and venture capital is that private equity investors in a company are at a mature stage and venture capital investments in the company at an early stage of the company life cycle.

    The Shariah contract that is used in private equity and venture capital are Mudharabah, Musharakah, and Wakalah. Mudharabah is a transaction that discloses the amount of the cost and the profit transaction. It is a transaction of cost-plus profit transaction. The face value and the profit amount are being disclosed. Meanwhile, Musharakah is like a partnership or co-ownership. Parties contribute funds in the investment for the business activities operation. Wakalah is an agent or representor. The bank is appointed to be the agent in order to manage the fund wisely.

    The private equity and capital venture must be an underlying asset and the transactions’ structures themselves comply with Shariah. The top companies that offered private equity and venture capital are Creador, Xeraya Capital and Malaysia Venture Capital Management Berhad (MAVCAP).