Traditionally, these funds make approaches when they see value, or in other words, when the share prices of certain troubled companies, in their eyes, are too low.
They jump in, invest in the company and turn it around, then jump out when they've made a healthy profit.
Private Equity companies went relatively quiet over the past few years as the global financial crisis escalated, because they essentially borrow money, a lot of money, to make these takeover plays.
But now, it seems they're starting to re-emerge once again, and that may be a good sign for our sharemarket.
In December, PaperlinX confirmed that it received an incomplete and conditional takeover from an unidentified private equity player.
More recently, cleaning group, Spotless said that it received a $2.68 per share offer from Pacific Equity Partners.
That bid may be under threat because the company is demanding $2.80, which PEP has threatened to walk away from.
Today, the owner of iconic Australian brands like Bonds and King Gee, Pacific Brands, confirmed that it received an unsolicited takeover approach from Kohlberg Kravis Roberts.
Peter Esho from City Index said in a note today, that this development sends a clear signal that many Australian cyclical business, retail included, are now trading at levels so low that value is becoming very hard to dismiss.
He adds, that the approach by KKR, which is seen as a significant private equity player and turnaround specialist, will no doubt have a ripple effect on other businesses trading at a similar perceived discount to Pacific Brands. Peter Esho names David Jones, Myer, Harvey Norman and Ten as among the most attractive and may potentially attract similar offers from opportunistic private equity investors.
Here's the catch though, will there be further public outcry if these deals ever go ahead? Remember the failed private equity play for Qantas years ago? Australians who felt a connection and sense of ownership of the brand were outraged.
Similarly, Pacific Brands, David Jones and Harvey Norman are all very well known Australian brands.
Many of these private equity companies are internationally based.
Are more Australian companies falling into the hands of overseas investors? And is this a good - or a bad thing?
