The money behind the private equity boom

The private equity companies are still booming. They have raised more money and announced ever larger deals, but where is this money coming from? It's coming from what they called limited partners such as institutional investors or large pension funds.
But why have they chosen for private equity? Because of the larger annual returns, compared with these of the public market, lots of large investors created their own private equity firm or invested their capital in one of the existing ones, in order to get a piece of these giant returns. An other advantage for the private equity firms is that there is the possibility to dig deeper into the books of a company they want to acquire. So this allows them to do better. And at last, big institutional investors would destroy a stock share if they tried to sell it, because public capital is more liquid.

http://www.businessweek.com/investor/content/nov2006/pi20061107_031256_page_2.htm