Institutional investor

An organisation, pension funds and investment funds, whose purpose is to invest its assets or those held in trust for others.

Institutional investors may be involved in management buyouts. In that context, institutional investors provide the majority of the investor equity finance but do not take an active role in the management of the company following completion of the acquisition.

Institutional investors often act as activist shareholders by using their equity stake in a company to put public pressure on its management to effect change. For more information, see Practice notes, Shareholder activism and Climate change and shareholder activism.