Private equity — investing in companies that are not traded on a public stock exchange — has been one of the most consistently strong-returning asset classes over the past three decades. Cambridge Associates data consistently shows that top-quartile PE managers outperform public equity indices by several percentage points per annum over 10-year periods. The challenge is access: traditional PE funds are structured in ways that suit institutional investors (pension funds, endowments, sovereign wealth funds) far better than private individuals, regardless of how wealthy those individuals are.
This guide focuses on how high-net-worth individuals can access private equity returns through more accessible structures — listed PE vehicles, investment trusts, and UK tax-advantaged routes such as EIS and SEIS — without committing to a 10-year lock-up.
How Traditional PE Funds Work: The Structure You Are Mostly Excluded From
Understanding why listed PE exists requires understanding the structure it is trying to replicate.
A traditional PE fund is structured as a limited partnership. The general partner (GP) — the PE firm — manages the fund and makes investment decisions. The limited partners (LPs) — institutional investors, endowments, family offices — provide the capital. LPs are passive: they commit capital but have no say in day-to-day investment decisions.
Committed capital is drawn down over the first three to five years as the GP identifies investment opportunities. LPs do not hand over the money at once: they receive "capital calls" as deals are made. This creates the cash management challenge of being ready to meet calls at short notice.
The J-curve refers to the characteristic return profile of a PE fund in its early years. In the first few years, returns are negative: management fees are being paid, investments are being made at cost, and valuations do not yet reflect operational improvements. As portfolio companies are improved and eventually sold, returns turn positive. The full realisation of returns typically occurs in years seven to ten (or later). The J-curve is the reason PE requires patient capital.
Carried interest is the GP's performance fee — typically 20% of profits above a hurdle rate (commonly 8% per annum). This aligns the GP's interests with LPs, but it also means that the economics of PE management are significantly loaded in the GP's favour for top-performing funds.
Minimum commitments in institutional PE funds typically start at $1–5 million per fund, with many top-tier managers requiring $10 million or more. Access is by invitation. Without the relationships and scale of an institutional LP, most private investors — however wealthy — cannot access the best PE managers directly.
Listed Private Equity: Buying PE Through the Stock Exchange
Listed private equity companies and investment trusts hold portfolios of private equity investments and trade on public stock exchanges. You can buy them in your brokerage account with the same ease as buying a share in Unilever.
UK-listed PE investment trusts include:
3i Group — one of the largest PE investment companies globally, listed on the FTSE 100. Holds controlling stakes in mid-market European businesses. Its portfolio company Action (a European discount retailer) has been one of the most successful private equity investments of recent decades.
HarbourVest Global Private Equity — a fund-of-funds structure providing diversified exposure to many PE managers globally.
Pantheon International — another fund-of-funds, investing across buyout, venture, and growth equity strategies globally.
NB Private Equity Partners — Neuberger Berman's listed PE vehicle, focused on co-investments alongside leading PE managers.
Oakley Capital Investments — mid-market European technology, education, and consumer businesses.
The discount to NAV: Listed PE vehicles frequently trade at a discount to their reported net asset value (NAV) — often 20–40% during periods of market stress. This creates an interesting dynamic: buying a PE portfolio at a 30% discount to independently audited NAV implies that even if the underlying PE returns are ordinary, the listed investor is getting them cheaply. Conversely, during periods of optimism, listed PE can trade near or even above NAV.
The discount also reflects the market's scepticism about PE valuations themselves. Private companies are valued quarterly using discounted cash flow models and comparable transactions — not by a live market. Some investors argue that PE valuations are smoothed and that the "true" NAV is lower than reported during a downturn.
Liquidity: Listed PE is fully liquid — you can sell your shares any day the stock market is open. You receive the secondary market price (which includes the discount or premium to NAV), not the underlying portfolio value.
EIS and SEIS: UK Tax-Advantaged PE-Style Investment
The Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) are UK government programmes that incentivise investment in early-stage companies by providing substantial tax relief. While they are not PE funds in the traditional sense, they provide exposure to private company growth — often in technology, life sciences, or consumer businesses — with tax advantages that no institutional PE fund can match.
EIS:
- Income tax relief of 30% on investments up to £1 million per year (£2 million if at least £1 million is in knowledge-intensive companies)
- CGT deferral: gains from other disposals can be deferred by reinvesting in EIS
- CGT exemption: gains on EIS shares held for three years are exempt from CGT
- Loss relief: if an EIS investment fails, losses can be offset against income tax at your marginal rate, reducing the after-tax cost of the investment significantly
- IHT exemption: EIS shares held for two years may qualify for Business Property Relief (100% IHT exemption)
SEIS:
- Income tax relief of 50% on investments up to £200,000 per year
- CGT reinvestment relief: 50% of gains reinvested in SEIS are exempt from CGT
- Loss relief as per EIS
The combined effect of EIS loss relief and income tax relief means that a higher-rate taxpayer investing £100,000 in EIS immediately receives £30,000 in income tax relief and, if the investment fails entirely, can claim a further £28,000 in loss relief — meaning the after-tax cost of a total loss is only £42,000. This is a fundamentally different risk-return proposition to an unrelieved PE investment.
Risks: EIS and SEIS invest in young, often pre-revenue companies. Failure rates are high — realistically, most early-stage investments will fail. The tax reliefs are designed to make the portfolio economics work despite individual failures. EIS/SEIS should be approached as a portfolio strategy (investing in many companies over several years) rather than concentrated bets. They are inherently illiquid (shares are not publicly traded; the holding period before sale is typically three to seven years).
Venture Capital Trusts (VCTs)
VCTs are listed investment companies (traded on the London Stock Exchange) that invest in smaller, higher-risk companies. They share characteristics of both listed PE and EIS:
- Income tax relief of 30% on new subscriptions up to £200,000 per year
- Dividends from VCTs are tax-free
- Gains on disposal are exempt from CGT
- Listed, so the shares can be sold (though liquidity is limited and secondary market prices are typically below the underlying portfolio value)
VCTs have generated meaningful tax-free dividends for investors — many VCTs have distributed 4–7% of NAV annually in recent years. The combination of income tax relief and ongoing tax-free dividends makes VCTs attractive for high earners seeking to shelter income tax while generating income.
The Vintage Year Factor
One of the most important concepts in PE investing is vintage year — the year in which a fund begins deploying capital. Funds that invest during recessions (2009, 2020) often perform significantly better than those that invest at market peaks, because they acquire companies cheaply and benefit from the subsequent recovery. Funds that deploy at the top of a cycle (2006–07, 2021) face the reverse problem.
For investors entering PE through listed vehicles, vintage year is partially smoothed by the fact that existing portfolios contain investments made across multiple years. For direct EIS/SEIS investors, committing across multiple years — rather than making a single large investment in one year — provides similar vintage year diversification.
UK Tax Treatment of PE Distributions
For listed PE vehicles held outside an ISA or SIPP, distributions are typically treated as dividends (subject to dividend tax above the £500 allowance). Capital gains on disposal are subject to CGT at 18% or 24% for higher-rate taxpayers.
For EIS and SEIS investments held to the point of a sale, qualifying gains are entirely exempt from CGT. Dividends from EIS companies during the holding period do not benefit from the same exemption.
Pension (SIPP) suitability: VCTs cannot be held inside a SIPP. Listed PE investment trusts can be. EIS/SEIS cannot be held inside SIPPs — the tax reliefs cannot be combined with pension tax relief on the same investment.
What Realistic Returns Look Like
PE as an asset class has historically delivered returns in the range of 15–20% per annum for top-quartile managers, compared to 8–10% for public equities over the same periods. But:
- Top-quartile returns require access to top-quartile managers — not always available to private investors
- Listed PE trades at a discount that both helps (buying cheaply) and creates volatility
- EIS/SEIS returns are highly dependent on the portfolio mix and manager quality; the tax reliefs provide a meaningful boost to net-of-tax returns even where gross investment performance is modest
The illiquidity premium — the additional return PE offers in exchange for locking up capital — is real but requires that investors can genuinely afford not to access the capital for the investment period.
Compliance Caveat
Tax reliefs including EIS, SEIS, and VCT are subject to rules that change over time. The figures and rules in this article reflect the position as understood in mid-2026 and may not reflect subsequent changes. Investments in PE, EIS/SEIS, and VCTs involve significant risk of capital loss. Past performance of PE as an asset class does not guarantee future returns. This article is for general information only and does not constitute personal financial advice. Seek professional advice before making investment decisions.
How Global Investments Can Help
Access to quality private equity — whether through listed vehicles, curated EIS/SEIS portfolios, or VCT subscriptions — is one of the areas where working with an experienced wealth manager makes the most difference. Global Investments helps clients build private equity exposure appropriate to their overall portfolio, risk tolerance, and tax position, selecting vehicles with strong track records and ensuring that tax reliefs are fully utilised where applicable.
If you would like to discuss incorporating private equity exposure into your portfolio, contact our investment team for an initial conversation.
This article is for general information only and does not constitute financial, legal or tax advice. Rules, prices and regulations change; verify current requirements with a qualified adviser before acting.