Performance Of Private Equity Funds
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Performance Of Private Equity Funds
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Author : Taro Niggemann
language : en
Publisher: GRIN Verlag
Release Date : 2005-09-20
Performance Of Private Equity Funds written by Taro Niggemann and has been published by GRIN Verlag this book supported file pdf, txt, epub, kindle and other format this book has been release on 2005-09-20 with Business & Economics categories.
Master's Thesis from the year 2005 in the subject Business economics - Investment and Finance, grade: 1.0, Otto Beisheim School of Management Vallendar, course: Doppeldiplomprogramm WHU Koblenz / EM Lyon, language: English, abstract: Private equity is currently replacing hedge funds as the most observed asset class. And while mutual funds experience a decline of assets under management, buyout funds break all records as far as fund raising is concerned. The attractiveness of buyout funds among investors is often attributed to superior returns and to an allegedly lower correlation with other asset classes. However, buyout fund returns also show superior volatility. In addition to that risk factor, investors must face liquidity and transparency risk. It is common agreement that investors are compensated for the elevated risk through a return premium. This and the cited lower correlation prompt more and more investors to add private equity into their portfolios. The wide-spread opinion of superior private equity performance is backed by several studies. But the analysis of these studies reveal that a number of them employ methodologies which are disapproved of by experts on theoretical private equity performance measurement. Furthermore, some have a one-sided notion of financial performance. Benchmarking, risk and correlation data which are crucial for an overall performance assessment often lack. The analysis of a series of technically appropriate, objective studies shows that private equity has historically outperformed public equity with regard to returns, in Europe more than in the United States (US). What remains unsolved is to which extent this return premium rewards the inherent, additional risk of private equity investments. And what is more certain: the prevalent view on correlation seems to be wrong. Empirical evidence and qualitative analysis speak for high correlation between private equity and the major asset classes. The most important driver for individual fund performance appears to be the quality of fund management. Thereby, specialized teams outperform others. Moreover, specialized funds provide investors better opportunity to diversify their private equity portfolio. Fundraising and investment conditions for private equity funds in France and Germany are favorable, but the accomplishment of superior performance will become harder in the future. The rules of the private equity business are changing as operating leverage has replaced financial leverage as the essential value driver.
The Performance Of Private Equity
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Author : Jörg Eschmann
language : en
Publisher: GRIN Verlag
Release Date : 2010-12-27
The Performance Of Private Equity written by Jörg Eschmann and has been published by GRIN Verlag this book supported file pdf, txt, epub, kindle and other format this book has been release on 2010-12-27 with Business & Economics categories.
Scientific Essay from the year 2010 in the subject Business economics - Investment and Finance, , course: -, language: English, abstract: The European private equity market had achieved a considerable volume until 2008. Reasons for increasing the volume can be seen in the favourable economic development, low inflation and strong competitive pressure on the part of financial intermediaries. These led to falling swap spreads on the financial markets and increased the investors’ risk tolerance. Then, in September 2009, the investment business was depressed. The dreariness in the business with private equity participations or buy-outs could already clearly be read in the half-year figures on the market. The amounts invested also declined by just over one third. Due to a lack of awareness, private equity is still frequently associated with high risk. Investing in an individual company can sometimes be fraught with risk. Since private equity funds work in a highly specialised way and concentrate on specific sectors or industries, the investment in a single private equity fund can also be risky. The risk of default of an umbrella fund with investments in approx. 20 or more target funds, however, is very low due to broad diversification. While additional costs are incurred for the investor for the services provided by the umbrella fund, the expected return is still clearly double-digit, even after subtracting these costs. The average annual return on private equity is regularly 3 to 5% above the average annual yields of stock investments. Recent studies provide evidence that companies that were sold by private equity investors achieved an annual growth in value of 24% to 29% - comparable listed companies managed added value of only nine percent. Private equity investments are investments in not listed companies with a high risk of default, low fungibility and transparency. A higher return on the investments is inevitably necessary – and feasible.
Performance Of Private Equity Funds
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Author : Ludovic Phalippou
language : en
Publisher:
Release Date : 2008
Performance Of Private Equity Funds written by Ludovic Phalippou and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2008 with categories.
Using a dataset of 1328 mature private equity funds, we find that performance estimates found in previous research and used as industry benchmark are overstated. We show that in commonly used samples, accounting values reported by mature funds for non-exited investments are substantial and we provide evidence that these mostly represent living dead investments. We also document a bias towards better performing funds in these data. After correcting for sample bias and overstated accounting values, average fund performance changes from a slight overperformance to a substantial underperformance of 3% per year with respect to the Samp;P 500. Assuming a typical fee structure, we find that gross-of-fees these funds outperform by 3% per year. We conclude that the stunning growth in the amount allocated to this asset class cannot be attributed to genuinely high past net performance. We discuss several potentially misleading aspects of standard performance reporting and discuss some of the added benefits of investing in private equity funds as a first step towards an explanation for our results.
The Performance Of Private Equity Funds
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Author : Ludovic Phalippou
language : en
Publisher:
Release Date : 2010
The Performance Of Private Equity Funds written by Ludovic Phalippou and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2010 with categories.
The performance of private equity funds as reported by industry associations and previous research is overstated. A large part of performance is driven by inflated accounting valuation of ongoing investments and we find a bias toward better performing funds in the data. We find an average net-of-fees fund performance of 3% per year below that of the Samp;P 500. Adjusting for risk brings the underperformance to 6% per year. We estimate fees to be 6% per year. We discuss several misleading aspects of performance reporting and some side benefits as a first step toward an explanation.
Investors In Private Equity Funds
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Author : Daniel Hobohm
language : en
Publisher: Springer Science & Business Media
Release Date : 2010-07-03
Investors In Private Equity Funds written by Daniel Hobohm and has been published by Springer Science & Business Media this book supported file pdf, txt, epub, kindle and other format this book has been release on 2010-07-03 with Business & Economics categories.
Daniel Hobohm analyses investments by international investors in private equity and venture capital funds over the last two decades. He compares different investor types in their fund preferences, home bias and investor responses to market shocks.
Private Equity
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Author : Douglas Cumming
language : en
Publisher: John Wiley and Sons
Release Date : 2009-12-31
Private Equity written by Douglas Cumming and has been published by John Wiley and Sons this book supported file pdf, txt, epub, kindle and other format this book has been release on 2009-12-31 with Business & Economics categories.
A comprehensive look at the private equity arena With private equity differing from other asset classes, it requires a whole new approach for those trained in more traditional investments such as stocks and bonds. But with the right guidance, you can gain a firm understanding of everything private equity has to offer. This reliable resource provides a comprehensive view of private equity by describing the current state of research and best practices in this arena. Issues addressed include the structure of private equity funds and fundraising, the financial and real returns of private equity, and the structure of private equity investments with investees, to name a few. Discusses the role of private equity in today's financial environment Provides international perspectives on private equity Details the regulation of private equity markets Filled with in-depth insights and expert advice, this book will provide you with a better understanding of private equity structures and put you in a better position to measure and analyze their performance.
Private Equity Investments
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Author : Claudia Sommer
language : en
Publisher: Springer Science & Business Media
Release Date : 2012-10-08
Private Equity Investments written by Claudia Sommer and has been published by Springer Science & Business Media this book supported file pdf, txt, epub, kindle and other format this book has been release on 2012-10-08 with Business & Economics categories.
Private Equity experienced dramatic flutuations in investment activity in line with the turbulences of financial markets in recent years. Claudia Sommer develops a theoretical framework of factors driving private equity investment activity and the resulting performance implications. Using a data set of more than 40,000 European transations between 1990 and 2009 she applies a variety of econometrial approaches and shows how neoclassical aspects, information asymmetries, agency conflicts, and market timing contribute to the dynamics in the private equity market. In a performance analysis of more than 1,300 European private equity funds, she reveals how fund performance is linked to investment activity.
Advanced Introduction To Private Equity
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Author : Gompers, Paul A.
language : en
Publisher: Edward Elgar Publishing
Release Date : 2022-08-12
Advanced Introduction To Private Equity written by Gompers, Paul A. and has been published by Edward Elgar Publishing this book supported file pdf, txt, epub, kindle and other format this book has been release on 2022-08-12 with Business & Economics categories.
This Advanced Introduction provides an illustrative guide to private equity, integrating insights from academic research with examples to derive practical recommendations. Paul Gompers and Steven Kaplan begin by reviewing the history of private equity then exploring the evidence on performance of private equity investments at both the portfolio company level and fund level, documenting the creation of economic value. The book then presents a set of actionable frameworks for driving value creation in private equity investments. It concludes by examining how private equity investors raise funds and how they successfully manage their private equity firms.
Portfolio Strategies Of Private Equity Firms
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Author : Ulrich Lossen
language : en
Publisher: Springer Science & Business Media
Release Date : 2007-12-22
Portfolio Strategies Of Private Equity Firms written by Ulrich Lossen and has been published by Springer Science & Business Media this book supported file pdf, txt, epub, kindle and other format this book has been release on 2007-12-22 with Business & Economics categories.
Ulrich Lossen explores the trade-off between diversification and specialization in private equity funds. In a first step, he analyzes the influence of external factors on the choice of private equity firms to diversify their portfolios across different dimensions, such as financing stages, industries, and geographic regions. Then, he examines the impact of diversification on private equity funds’ performance.
Beyond The J Curve
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Author : Thomas Meyer
language : en
Publisher: John Wiley & Sons
Release Date : 2005-08-12
Beyond The J Curve written by Thomas Meyer and has been published by John Wiley & Sons this book supported file pdf, txt, epub, kindle and other format this book has been release on 2005-08-12 with Business & Economics categories.
In recent times, venture capital and private equity funds have become household names, but so far little has been written for the investors in such funds, the so-called limited partners. There is far more to the management of a portfolio of venture capital and private equity funds than usually perceived. Beyond the J Curve describes an innovative toolset for such limited partners to design and manage portfolios tailored to the dynamics of this market place, going far beyond the typical and often-simplistic recipe to 'go for top quartile funds'. Beyond the J Curve provides the answers to key questions, including: Why 'top-quartile' promises should be taken with a huge pinch of salt and what it takes to select superior fund managers? What do limited partners need to consider when designing and managing portfolios? How one can determine the funds' economic value to help addressing the questions of 'fair value' under IAS 39 and 'risk' under Basel II or Solvency II? Why is monitoring important, and how does a limited partner manage his portfolio? How the portfolio's returns can be improved through proper liquidity management and what to consider when over-committing? And, why uncertainty rather than risk is an issue and how a limited partner can address and benefit from the fast changing private equity environment? Beyond the J Curve takes the practitioner's view and offers private equity and venture capital professionals a comprehensive guide making high return targets more realistic and sustainable. This book is a must have for all parties involved in this market, as well as academic and students.