Public vs Private Equity: Key Differences Explained
- 29th January 2026
- 03:00 PM
- 9 min read
Public equities allow you invest in shares of companies trading on stock exchanges. While private equities are a mean to directly investing in private companies not available on the stock exchanges.
Thus, the main difference between public vs private equity is that the former represents owning shares publicly listed and growing as those stocks grow. The latter means a direct investment in private companies to fuel their growth and exit when there is a profit-making potential.
Public equity investment is rising in India, with a unique and direct stock market investor currently standing at 13.6 crore. While private equity investments require a higher investment amount, India has still recorded about 1000 private equity investments every year in the past decade.
If you are into investments and want to get clarity on both to make an informed decision, read about their differences here.
A Brief Definition of Public Equities
Before dividing into the key differences between private equity vs public equity, you must first have a brief idea about each of them. Companies that have gone public list their shares on the stock exchanges of India, such as the Bombay Stock Exchange (BSE) or the National Stock Exchange (NSE).
By listing their shares, public companies allow you to buy their shares, i.e. a small stake of ownership. Through trusted stockbrokers like the PL Capital Group – Prabhudas Lilladher, you can look for and buy company shares and hold them in your Demat account.
Public equities are mostly liquid, allowing you to buy and sell shares easily and letting you capitalise on your own potential growth.
What is Private Equity?
As the name implies, private equity means an investment mode to put your money into private companies that are not yet listed on exchanges. Interested investors typically invest money into private companies in return for a certain amount of ownership stake.
However, the minimum investment capital required here is much higher compared to public equities. As per the SEBI mandate, interested investors must invest at least INR 1 crore in private equities.
The aim here is to fuel the growth of the company and exit with profits when the company decides to go public through an IPO or get merged and acquired by another company.
Key Differences Between Private and Public Equity
As you have noted the definitions of both equity types, here is a detailed look at the difference between private equity and public equity, depending on factors like Accessibility, liquidity, return and more:
| Parameters | Public Equity | Private Equity |
| Accessibility | Such equities are readily available on the stock exchanges to invest in them. It allows both retail and institutional investors to invest. | This equity type is generally limited to High-net-worth Individuals (HNIs), institutional investors, private equity firms, etc. |
| Liquidity | With higher buyer and seller involvement, public equities are mostly highly liquid. You can buy and sell stocks from 9:15 to 3:30 PM or hold them to sell at a later time to book a profit. | This type of investment requires a long-term commitment. Investors might need to stay invested for at least 3 to 5 years or, in some cases, for up to 10 years. |
| Return and associated risks | On average, stock market returns usually fall between 9% and 12%, but their outcome still depends on the prevailing market conditions. | Private equities generally have a higher risk relative to public equities, but return potential is also much higher. |
| Control and management | You might get limited control over the company decisions of publicly listed companies. | Private equity holders usually play a larger role, take part in crucial decisions of the company, etc. |
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Some Detailed Features and Benefits of Public Equity
Now that you have an idea of the differences between private equity vs public, you must now note some of their features to make a better investment decision with more clarity:
1. Accessibility
You can get access to public equities and invest in them easily, as they are highly accessible to investors. For example, both the BSE and the NSE have more than 7500 companies listed. Thus, depending on your goal, liquidity aspects, etc, you can easily buy shares from this high availability.
2. High Liquidity
If you have a Demat and a trading account with a trusted stockbroker, e.g., PL, you can easily explore stocks and choose shares to invest in. Equities or stocks that have a higher trade volume can be bought and sold easily to realise potential profit.
3. Higher Return potential
Staying invested for a longer term might result in making a profit from a public equity investment. Ideally, staying invested for at least 5 to 10 years might result in profits as the market generally recovers from short-term swings within this time.
Risks of Investing in Public Equity
Although there are advantages, you must also remain aware of some of the risks of public equity investments:
1. Market Volatility
The equity market is generally highly volatile, and the stock performances are usually affected due to political events, news, company performance, etc. Such volatility might result in investor losses.
2. Risks of Impulsive Decisions
During market turbulence, investors, especially those who are new, might make impulsive buying or selling decisions. Such actions might lead to losses as well.
Key Features and Benefits of Investing in Private Equity
While from the differences between public vs private equity, you have an idea how private equities work, learning their benefits might give you a clearer picture:
1. Lesser Market volatility
Private equities are not traded on stock exchanges and are not traded daily. It reduces the impact of the overall market sentiment and lowers short-term fluctuations.
2. Allows Active Participation
By investing in private equities, investors acquire ownership stakes that allow them to participate in company management and operational decisions. This helps drive growth and increase the chances of profitability.
A Few Risks of Investing in Private Equity
Similar to public equities, private ones also have some risks that you must note:
1. Higher Risk of Losses
As a private equity investment requires a minimum investment of INR 1 crore, the risks might amplify. If the company does not grow as expected, investors might face substantial losses.
2. Less Liquidity
If you are an HNI and invest in private equities, you must note that liquidity is lower in this investment. Your investment might stay locked in even up to 10 years before you book a profit and exit.
Which Is Better: Public or Private Equity?
It depends on your investment objective, risk profile, available capital to invest and other factors. For example, private equities are generally suitable for HNI investors. If you fall under this category and are ready to invest a higher amount with a higher risk, then you might opt for it.
Conversely, public equities require less capital and are usually highly liquid. If your objective is to capitalise on the growth of the public stock at a lower investment capital, you might opt for this.
Conclusion
While investing, if you are confused between public vs private equity, you must learn their key differences. While public equity means owning shares of publicly listed companies, private equity allows you to invest directly into private and unlisted companies.
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FAQs on Public vs Private Equity
1. What are the main differences between private equity and public equity?
The main difference between public vs private equity is that the former lets you invest in publicly listed company shares. While the latter lets you directly invest in private companies in return for ownership stakes.
2. How do investment strategies differ between private and public equity?
The strategy behind a private equity investment is to put significant capital, provide strategic guidance, etc, to grow the company. With public equity investments, you get easy access to the capital market, and retail investors can benefit from the growth of shares.
3. Which offers better returns: public equity or private equity?
Between public vs private equity, the private equities historically have provided a higher return against a significant investment and risk. Public equities might offer a moderate return for a relatively lower risk and investment capital.
4. How does liquidity differ in public vs private equity?
Public equities usually have high trading volume and thus offer higher liquidity compared to private equities.
5. Are there higher risks in private equity compared to public equity?
Yes, in case the company fails or underperforms even after a long-term investment, due to the larger investment amount, the risk of losses is high.
6. Which type of equity investment is better for long-term growth?
It depends on factors such as your investment capital, horizon, risk appetite, etc. Public equities might result in profit in the long term, but at lower costs and risk. Private equities involve a significant investment, higher risks for a potentially higher return.
7. Can retail investors access private equity in India?
Yes, retail investors can invest in private equities through SEBI-registered AIFs. However, these are subject to meeting eligibility and a minimum investment amount.
