The Top 7 Private Equity Papers of the Last Month
Low yields in conventional asset classes have caused investors to seek out higher return assets. One of the beneficiaries has been Private Equity, which in 2015 raised a best-ever $185 billion of new money. But a recent paper by CEPR argues that investors have been unwise to allocate so much capital to private equity.
The most popular Private Equity papers from the last couple of months, including the CEPR paper, are listed below.
Are Lower Private Equity Returns the New Normal? (CEPR, 2016)
U.S. PE fundraising had its best year ever in 2015 — raising $185 billion. But is the enthusiasm of investors justified? Do private equity buyout funds deliver outsized returns to investors and will they do so in the future? This report answers this question by reviewing the most recent empirical evidence on buyout fund performance; the answer is no.
Salaries in Private Equity (surveys covering North America, Asia, UK and EMEA)
Our most read surveys cover compensation benchmarks for different positions within North American private equity, Asian Private Equity, UK Private Equity, EMEA Private Equity and Middle Eastern Asset Management roles.
Asset Allocation with Private Equity (Mark Anson, 2016)
Private assets such as venture capital and private equity have long been a thorn in the side of CIOs and asset allocators. They lack liquidity which means that it is difficult to model their return streams in a risk budget or asset allocation model. In this paper, the author seeks to correct the misspecification of these, and other, illiquid assets, showing how the parameters of the underlying distributions are commonly underestimated. A new method is presented that reveals the true distributional parameters of these illiquid asset classes.
The New Prominence of Private Assets: Targeting outcomes (BlackRock, 2016)
Once dominated by PE buyouts and VC, private asset strategies are now numerous, diverse, and able to contribute to specific investment outcomes such as real return, income and growth. This paper explores some of the key concerns in building private asset portfolios, such as risk and potential over-concentrations.
Global Alternatives Survey 2016 (Willis Towers Watson)
This comprehensive 99-page document examines current trends in ten different alternative asset classes including hedge funds, private equity, infrastructure, real estate, illiquid credit and insurance-linked securities. The survey reveals how the preferences for alternative assets vary between different types of asset owner, and lists the top alternative asset managers within each category.
How Do Venture Capitalists Make Decisions? (2016)
This paper provides the findings of a survey of close to 900 institutional venture capitalists (VCs) at 681 firms. It seeks to better understand how they make decisions across eight different investment areas: valuation; deal sourcing; deal structure; exits; deal structure; internal organization of firms; post-investment value-added; and relationships with limited partners. The findings also highlight differences in practices across geography, stage, industry, and past success.
Split Decisions: Institutional Investment in Alternative Assets (BNY Mellon, 2016)
Institutional investors have been steadily growing their alternative asset portfolios over the last decade, spreading across the alternatives space of hedge funds, private equity, real estate and infrastructure. This study by BNY Mellon suggests that this trend is expected to continue, with a substantial proportion of asset owners planning to increase their allocations to alternative asset classes. This move however does not mean that the industry can become complacent. Investors are also becoming more demanding and sophisticated. Further growth, as a result, will be supported by the continued development of new products in the alternatives universe.