Limited Partner Performance and the Maturing of the Private Equity Industry
Berk A. Sensoy
Ohio State University - Fisher College of Business
California State University, Fullerton
Michael S. Weisbach
Ohio State University (OSU) - Department of Finance; National Bureau of Economic Research (NBER)
November 27, 2013
Charles A. Dice Center Working Paper No. 2013-01
Fisher College of Business Working Paper No. 2013-03-01
We evaluate the performance of limited partners’ (LPs) private equity investments over time. Using a sample of 14,380 investments by 1,852 LPs in 1,250 buyout and venture funds started between 1991 and 2006, we find that the superior performance of endowment investors in the 1991-1998 period, documented in prior literature, is mostly due to their greater access to the top-performing venture capital partnerships. In the subsequent 1999-2006 period, endowments no longer outperform, and neither have greater access to funds that are likely to restrict access nor make better investment selections than other types of institutional investors. We discuss how these results are consistent with the general maturing of the industry, as private equity has transitioned from a niche, poorly understood area to a ubiquitous part of institutional investors’ portfolios.
Number of Pages in PDF File: 55
Keywords: private equity performance, institutional investors
JEL Classification: G11, G23, G24
Date posted: February 5, 2013 ; Last revised: November 28, 2013
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