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Essays On Investing In Private Equity
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Book Synopsis Essays on Investing in Private Equity by : Adrian Oberli
Download or read book Essays on Investing in Private Equity written by Adrian Oberli and published by . This book was released on 2016 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis deals with practical issues when investing in private equity. The first essay offers investors a strategy how to recommit to achieve their desired allocation to the asset class. Recommitments are advised to be composed of 1) distributions and 2) commitments that are not expected to be called anymore, both weighted by the inverse of the actual investment degree, and 3) the amount necessary to rebalance the asset classes to the strategic asset allocation. Historical simulations show that investment degrees in the range of 0.7 to 0.8 can be attained. The second essay addresses the selection of individual funds and discusses whether past top-quarter performance can be seen as an indication of future outperformance and whether investing in outperforming GPs can be implemented in practice? Empirical evidence on private equity return persistence shows mixed results. Further, implementing an approach based on past performance is difficult as subsequent funds are raised before previous funds' performance can be accurately measured. In the end, a holistic due diligence process might offer the best insights on the factors that in the end determine success or failure of managers and give investors the best indication to find top quartile GPs. The third essay deals with the fact that investors not only try to choose the best performing GPs, but also try to diversify their investments geographically. As investors are increasingly interested in emerging markets, the essay examines the determinants of private equity market activity and shows the differences of drivers in Asia compared to developed markets. Exit opportunities and the amount of credit provided by the banking sector are strong drivers. Unlike in developed markets, emerging markets are negatively impacted by the amount of credit provided by the banking sector. Funding of transactions may stand in direct competition with banks, explaining the negative relationship with.
Book Synopsis Essays in Private Capital by : Vrinda Mittal
Download or read book Essays in Private Capital written by Vrinda Mittal and published by . This book was released on 2023 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: These results get stronger post the financial crisis, when underfunded positions and their subsequent investments in private equity increased. The paper shows that traditionally positive post buyout efficiency results turn negative in recent years, as marginal investors matching with marginal private equity funds pull down the average. The most underfunded pensions also realize lower total private equity returns relative to the least underfunded ones. These results suggest possibility of a ``funding doom loop" as currently public pensions use assumed return on assets to calculate liabilities. The second essay titled ``Flattening the Curve: Pandemic-Induced Revaluation of Urban Real Estate" focuses on work from home with the onset of the COVID-19 pandemic and its effect on residential real estate prices across the U.S. We show that the COVID-19 pandemic brought house price and rent declines in city centers, and price and rent increases away from the center, thereby flattening the bid-rent curve in most U.S. metropolitan areas.
Book Synopsis Essays in Private Equity by : Ji-Woong Chung
Download or read book Essays in Private Equity written by Ji-Woong Chung and published by . This book was released on 2010 with total page 163 pages. Available in PDF, EPUB and Kindle. Book excerpt: Abstract: This first essay studies the motivations and the consequences of leveraged buyouts of privately held companies. Over the last two decades, the number (enterprise value) of leveraged buyout transactions involving privately held targets totals 10,013 ($855 billion), accounting for 46% (21%) of the worldwide leveraged buyout market. Yet the vast majority of academic studies focus on the buyouts of publicly held targets. This chapter investigates the effects of leveraged buyouts on privately held targets. I find that, unlike the corporate restructuring process of public firms after the buyouts, private targets sponsored by private equity firms grow substantially after the buyouts. The overall evidence suggests that private equity firms, through leveraged buyouts, facilitate private targets' growth by alleviating targets' investment constraints. In the second essay which is co-authored with Berk Sensoy, Lea Stern, and Mike Weisbach, we study model and estimate the total incentives facing private equity general partners. Incentives from the explicit fee structure ("two and twenty") of private equity funds understate the actual incentives facing private equity general partners because they ignore the rewards stemming from the effect of current performance on the ability to raise larger funds in the future. We evaluate the importance of these implicit incentives in the context of a learning model in which investors use current performance to update their assessments of a general partner's ability, and, in turn, decide how much capital to allocate to the partners' next fund. Our estimates suggest that implicit incentives from expected future fundraising are about as large as explicit incentives from carried interest in the current fund. This implies that the performance-sensitive component of revenue is about twice as large as suggested by previous estimates based only on explicit fees. Consistent with the model, we find that these implicit incentives are stronger when abilities are more scalable and weaker when current performance is less informative about ability. Overall, the results suggest that implicit incentives from future fundraising have a substantial impact on general partners' welfare and are likely to be an important factor in the success of private equity firms. In the last chapter, I study performance persistence in the private equity industry. Contrary to what has been known in the literature, I find that performance persistence in private equity is short-living. Current fund performance is positively and significantly associated with the first follow-on fund performance, but not with the second or third follow-on funds. Even the statistically significant association between two consecutive funds' performance is not economically large. The returns of the best performing quartile portfolio drops by about half, and those of the worst performing portfolio improve substantially from one fund to the next fund. There is no difference in the performance of the second (and after) follow-on funds of current top and bottom performing quartile portfolios. Performance converges in the long run. The commonality of relevant market conditions between two consecutive funds largely explains performance persistence. Also, excessive fund growth conditional on past performance erodes performance and reduces persistence.
Book Synopsis Essays on Listed Private Equity as an Investment Opportunity by : Simone Hollenwäger
Download or read book Essays on Listed Private Equity as an Investment Opportunity written by Simone Hollenwäger and published by . This book was released on 2016 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation project examines risk-return characteristics and valuation aspects of listed private equity (LPE). The main body of empirical research is supplemented by a preceding introductory part and by a subsequent conclusion and implications part. The first essay examines the performance of a global sample of LPE vehicles under different market regimes such as the economic crisis. I conduct the analysis by studying the market price and the net asset value (NAV) return of LPE compared to stock, bond and private equity markets. In order to understand the drivers of LPE performance, fund-specific attributes, macroeconomic and stock market factors are tested for both price and NAV returns. I find pro-cyclicality with public benchmarks during dipping markets and a strong influence of the fund flow towards the private equity industry and a high dependency on the borrowing costs to fund portfolio investments. The second essay examines the determinants of premia to NAV for LPE vehicles. Valuation determinants of traditional private equity and closed-end funds are tested to explain the persistent discount in LPE of 18.13%. I emphasize the analysis of drivers during crisis and the information content of historical premia as well as NAV returns. I find evidence that both traditional and behavioral finance factors from both valuation fields of private equity and closed-end funds determine premia. Sentiment, as a driving factor is of weaker influence during crisis time than expected. Investors form their opinion about management skills based on past NAV returns and exhibit rational expectations of future performance based on past premia. As the results suggest, this learning ability is diminished if the information content of the historical performance declines during crisis. The third essay analyzes the potential benefits of listed private equity in a pension fund's portfolio when confronted with investment constraints. Due to LPE's.
Book Synopsis Essays in Management of Private Equity Investments by : Holger Leist
Download or read book Essays in Management of Private Equity Investments written by Holger Leist and published by . This book was released on 2016 with total page 135 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Essays on Cross-border Private Equity Investments by : Ana Laura Balcarcel
Download or read book Essays on Cross-border Private Equity Investments written by Ana Laura Balcarcel and published by . This book was released on 2005 with total page 200 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Essays on Private Equity and Mutual Funds by : Maurice McCourt
Download or read book Essays on Private Equity and Mutual Funds written by Maurice McCourt and published by . This book was released on 2018 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Investment manager skill is one of the most researched topics in finance, so readers may wonder why there are still theses such as this one which launches three new Essays on the topic. There are two parts to the answer. The first part lies in the fact that the issue is an extremely important one for many people, organizations, and even governments, at all levels of society and in all corners of the globe. The second part of the answer lies in the fact that, despite intensive research going back 50 years at least, investment manager skill is not yet a well understood phenomenon. Taken together, these Essays contribute to various streams of the investment management literature by taking a fresh look at skill in asset classes where it is difficult to measure (private equity), or where the topic has not previously been studied in depth (mutual fund families). These Essays also contain useful information for practitioners and investors. By identifying at least some determinants of skill, practitioners can get a sense of the behaviors which add to (or subtract from) the value of their funds. By quantifying and locating skill in different type of funds, the papers' findings can also aid investors to focus their search for skill, and at least increase the probability of finding a skilled fund manager.
Book Synopsis Essays on Private Equity and Other Non-bank Investors by : Marcel Grupp
Download or read book Essays on Private Equity and Other Non-bank Investors written by Marcel Grupp and published by . This book was released on 2015 with total page 67 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Essays on Private Equity and Real Estate by : Hyeik Kim
Download or read book Essays on Private Equity and Real Estate written by Hyeik Kim and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation contains three essays in illiquid assets. The first two chapters study private equity. The first chapter examines whether the incentives implicit in general partners' contracts lead them to make value-destroying investments? Using a sample of European buyouts, I show that the structure of compensation contracts encourages GPs to overinvest in deals that are in later period of the investment phase to maximize their fee profits, even if the deals are unprofitable. Within each fund, deals made in later period of the investment phase have lower profit growth and lower net returns than those made earlier. This relationship persists after controlling for GP skills, fund sequences, and vintage year. Importantly, later period deals are more likely to be value-destroying. The results are concentrated in funds with higher earlier performance and in more established funds, suggesting that GPs with lower reputation costs are more likely to engage in such behavior. The results further suggest that the current fee structure can induce GPs to maximize their profits at the expense of LPs. The second chapter studies the effects of infrastructure privatization with the focus the effect of private equity acquisition of infrastructure. The privatization of infrastructure, especially by investor-owned private equity (PE) funds, raises questions about the economics of public goods and the policy question of who should own infrastructure assets. Airports represent a class of infrastructure that is increasingly important to the global economy and has experienced significant privatization in recent decades. This paper studies how ownership changes affect airport performance, with a focus on understanding both the role of privatization and any distinct effects of PE vs. non-PE private ownership in subsequent transactions. Across twenty performance measures, we observe marked improvements after PE acquisitions--in particular from non-PE private firms, which account for most of the PE deals--with no evidence of pre-trends. In contrast, non-PE privatizations and subsequent acquisitions lead to weaker or no improvement, and where it does occur it appears to reflect targeting rather than operational changes. We also study fees charged to airlines and measures from the income statement; these indicate higher prices after privatization and dramatically higher net income following PE acquisitions. Overall, we find relatively little evidence that privatization alone increases performance, and instead find strong evidence that infrastructure funds improve airport efficiency. The third chapter studies whether one's wealth affects her preference for liquidity. Korea has a unique rental system where a tenant can choose between paying a lump sum deposit called Chonsei or a monthly rent when renting a house. This unique system allows me to take the difference between the cost of monthly rent payment and the cost of Chonsei to calculate the liquidity premium for a quasi-identical asset. I find that within an apartment complex-year month, per unit price of liquidity decreases in size and price of apartment units, suggesting that wealthier households, ex-post, are given less compensation for illiquidity. The result expands the notion of investor clientele in liquidity premium by Amihud and Mendelson (1986) indicating that the investment horizon of investors may not be the only determinant in the cross-sectional explanation of liquidity premium. Other characteristics, such as wealth, could affect one’s preference for liquidity.
Book Synopsis Essays on Private Equity by : Miguel Sousa
Download or read book Essays on Private Equity written by Miguel Sousa and published by . This book was released on 2010 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Essays on Challenges for Institutional Investors in the Maturing Private Equity Industry by : Ingo Stoff
Download or read book Essays on Challenges for Institutional Investors in the Maturing Private Equity Industry written by Ingo Stoff and published by . This book was released on 2014 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Essays on Investment Style Drifts and Industry Relatedness in Private Equity by : David Rody
Download or read book Essays on Investment Style Drifts and Industry Relatedness in Private Equity written by David Rody and published by . This book was released on 2018 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis The Myth of Private Equity by : Jeffrey C. Hooke
Download or read book The Myth of Private Equity written by Jeffrey C. Hooke and published by Columbia University Press. This book was released on 2021-10-05 with total page 282 pages. Available in PDF, EPUB and Kindle. Book excerpt: Once an obscure niche of the investment world, private equity has grown into a juggernaut, with consequences for a wide range of industries as well as the financial markets. Private equity funds control companies that represent trillions of dollars in assets, millions of employees, and the well-being of thousands of institutional investors and their beneficiaries. Even as the ruthlessness of some funds has made private equity a poster child for the harms of unfettered capitalism, many aspects of the industry remain opaque, hidden from the normal bounds of accountability. The Myth of Private Equity is a hard-hitting and meticulous exposé from an insider’s viewpoint. Jeffrey C. Hooke—a former private equity executive and investment banker with deep knowledge of the industry—examines the negative effects of private equity and the ways in which it has avoided scrutiny. He unravels the exaggerations that the industry has spun to its customers and the business media, scrutinizing its claims of lucrative investment returns and financial wizardry and showing the stark realities that are concealed by the funds’ self-mythologizing and penchant for secrecy. Hooke details the flaws in private equity’s investment strategies, critically examines its day-to-day operations, and reveals the broad spectrum of its enablers. A bracing and essential read for both the financial profession and the broader public, this book pulls back the curtain on one of the most controversial areas of finance.
Book Synopsis Empirical Essays on Private Equity by : Robert Loos
Download or read book Empirical Essays on Private Equity written by Robert Loos and published by . This book was released on 2016 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Essays on Private Equity by : Marko Rikato
Download or read book Essays on Private Equity written by Marko Rikato and published by . This book was released on 2014 with total page 127 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Private Equity. Critical analysis from the points of view of investors and target companies by : Henning Wenzel
Download or read book Private Equity. Critical analysis from the points of view of investors and target companies written by Henning Wenzel and published by GRIN Verlag. This book was released on 2016-02-19 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: Seminar paper from the year 2013 in the subject Business economics - Investment and Finance, grade: 1,7, University of applied sciences, Cologne, course: International Investment & Controlling, language: English, abstract: Private Equity plays an increasingly important role in the financing of a wide range of businesses. Over the past 20 years, private equity has been on of the fastest growing markets for corporate finance. One of the reasons the private equity industry exist is that, in many cases, companies have needs for capital which, for various reasons, cannot be met from the public markets. Investors that provide capital to private equity funds invest in an asset class that entails relatively high-risk and high illiquidity in what remains a largely unregulated market. Planning how to exit an investment is just as important as preparing to make one because a merger adds value only if synergy, better management, or other changes make the two firms worth more together than apart. The target companies are supported with accountants, lawyers, investment bankers and other specialists. Especially Start-up companies are often characterised by negative cash flows and demand high investments. PE gives the chance to reduce the financial gap between selffinancing and stock exchange listing and can also help to improve the equity ratio. Another advantage of PE for target companies is the increase of equity and an improved balance sheet structure. Regarding to that, the negotiating position is strengthened towards creditors, the credit rating is improved and the financial room for investments increases. The main disadvantage of PE for target companies is the weakened influence of the initial shareholders. Especially different strategically views between those two groups might be difficult to solve. Due to the fact of the high risk, from the investors’ perspective, PE is a very interesting form of investment. Especially under diversification aspects the investment in PE funds make sense, because the investors offer investment opportunities that can not be replicated in the financial market and on top of that have a low correlation with other asset class. The firms standard practice of buying businesses and then, after steering them through a transition of rapid performance improvement and selling them is at the core of private equity’s success.
Book Synopsis Private Equity Unchained by : T. Meyer
Download or read book Private Equity Unchained written by T. Meyer and published by Springer. This book was released on 2014-09-10 with total page 329 pages. Available in PDF, EPUB and Kindle. Book excerpt: There are significant returns to be made from private equity, infrastructure, real estate and other illiquid investments, but a competitive strategy is essential for investment success and for meeting objectives. This book takes readers through all the considerations of planning and implementing an investment strategy in illiquid investments.
