Private Investment Specialists
What are private investments?
Private investments, are investment opportunities across private credit, venture capital, property, bullion and collectibles etc., , that are not publicly listed. Royce Stone Capital provides exclusive opportunities to a limited number of investors for the products we specialise in. We are not in the business of selling volume, but focus being architects of great opportunities. At the heart of what we do is structuring and aligning the right investment opportunities with the right investors.
Private investments that build wealth
Why private investments are so important?
When you look at how most family offices created their wealth, the bulk of them established their wealth through private businesses. To maintain and grow their wealth, a number of family offices then invested in property, private equity and private credit. Private investments, offer investors a competitive advantage, that public investments can't. Mainly because not all information and opportunities are publicly available to all market participants with private investments, allowing investors to make premium returns.
What are private investments?
Private investments include venture capital, private equity, private credit, real estate, collectables, heritage plates , arguably crypto (as you can trade amongst friends as well) and any asset class that isn’t publicly traded.
The fish and chip on the corner, is a private investment. The warehouse your supermarket operates out of is most likely privately owned. The reality is most assets globally are privately owned and as are most transactions.
These investments are not publicly traded and require private market participants to exchange assets between them.
The main feature of private investments is that they are not as liquid like publicly traded assets. For this investors earn an illiquidity premium (a higher risk adjusted return for holding onto a private asset), compared to public market transactions. Which is both an advantage and disadvantage.
What is an illiquidity premium?
The illiquidity premium is the higher risk adjusted return provided to investors for holding onto private investments (assets). By their nature private investments are not as liquid as are publicly listed securities, that have a large buyer and seller market.
The upside of this, is because these investments are not as liquid, as publicly traded securities, investors earn a higher return than traditional publicly traded securities.
The high return, comes with higher risks than publicly traded securities, as it may be harder for the investor to offload their investment in a down market, or may incur larger losses.
This risk can be mitigated in several ways.
1. By ensuring the underlying value of the investment is sound and is able to whether a range of market trends.
2. By the investor having direct control of the investment, to manage risk.
3. By the investor having patient capital, that is not forced to sell during market down turns.
Do private investments offer income and capital growth?
Private investments can grow your wealth, through capital growth or yield, and hybrid of the two in one investment.
Some private investments can do both yield and capital growth simultaneously.
- Private equity provide business profits and capital growth.
- Real estate can provided rental income and capital growth.
- Small business ownership, can provide profits and capital growth.
- Hybrid financial instruments such as convertible notes to businesses. That allows for interest return, and capital growth.
Other investments are purely focused on capital growth such
- Venture capital investments, are typically capital growth, but mature VC can provide income as well.
- Collectables such as heritage plates, collectable cars, watches and artwork etc.
Other investments offer yield or income, this includes.
- Private credit investments. Which can include providing credit to private businesses, using property as security which can be a first mortgage private loan, second mortgage loan or corporate debt facility. Read more on our direct lending investments here
Ultimately a balanced portfolio will have a mix of all these plus publicly traded stocks, with the right weighting of each.
