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| Type | Master's Thesis |
| Scope | Discipline-based scholarship |
| Title | European Private Equity Performance – Do Private Markets Outperform Public Markets? |
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| Institution | University of Zurich |
| Faculty | Faculty of Business, Economics and Informatics |
| Number of Pages | 58 |
| Date | 2022 |
| Abstract Text | The asset class of Private Equity was introduced to the public when the book “Barbarians at the Gate” was released by Bryan Burrough and John Helyar in 1990. Back then, the Private Equity industry was mainly focused on leveraged buyouts with the goal of splitting companies into piec-es and sell off these pieces to other market participants. This LBO wave of the late 1980s and early 1990s was driven by cheap debt and attempts to recreate returns as in the case of RJR Nabisco by Kohlberg Kravis Roberts & Co. Over the years, the Private Equity industry evolved from a rather niche market to a main player by increasing raised capital from roughly $240bn per year in 2000 to more than $1´400bn in 2021. In the light of relatively high management fees and performance fees for Private Equity funds, the question remains, if the liquidity risk premia are being compensated and if the fund performance follows a pattern, which might be predictable. Also, the two main private capital strategies, Private Equity and Venture Capital, might have dif-ferent development paths and predictors which could lead to different observable performance indicators. With the help of a major Private Equity-database this study answers the question, if there is a performance difference between Private Equity funds and public markets and if we can predict ex-post Private Equity (buyout) performance with ex-ante, relative neutral, predictors. We conclude that there is a significant overperformance of Private Equity funds in rela-tion to public markets, which ultimately compensate the liquidity risks involved. However, we are not able to identify significant, across the board, ex-ante predictors for ex-post performance of these funds. |
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