What is the main source of funding for private equity firms?

Private equity firms raise capital primarily from institutional investors such as pension funds, insurance companies, and sovereign wealth funds.

Why is Option A Correct?

Institutional investors provide large capital commitments for private equity funds.

Private equity firms pool these funds to acquire and restructure companies.

Why Not Other Options?

B (Management buyouts) → A buyout strategy, not a funding source.

C (Initial public offerings, IPOs) → Private equity firms exit investments through IPOs, but this is not a funding source.

D (Placings) → Common in public equity markets, not private equity.

???? Reference: CFA Institute (Private Equity Structures), CISI Wealth & Investment Management.