Private Equity: Episode 1 - The History of PE: The 19th Century

You can find in this article series the episodes I publish on LinkedIn about Private Equity: its history, definition, and financial techniques. Let's kick things off with a look back at the history of Private Equity.

The origins of modern Private Equity can be traced back to the 18th century in France and the United Kingdom, where it was used to finance industrial development and colonial expansion.

The first company specializing in Private Equity was French: the Société Générale de Crédit Mobilier. Founded in Paris in 1852 by the Pereire brothers, it notably financed railway lines in the United States. Although this initiative was short-lived, it marked the beginning of structuring Private Equity as a specialized activity. Before that, such financing was mainly carried out by wealthy individual investors or banks.

The first large-scale transaction came later, in the United States in 1901, with the creation of US Steel. This steel giant, still in operation today, was founded by J.P. Morgan, who purchased Andrew Carnegie’s steel mills and merged them with Federal Steel Company.

The first half of the 20th century saw the development of Private Equity, though highly regulated and dominated by the investments of the era’s great fortunes: Rockefeller, Vanderbilt, and others.

And so, the foundation was laid for this exciting new venture! Stay tuned for the next episode.