Performance in Private Equity: Are General Partnership Owners Important?
28 Pages Posted: 22 Jul 2010
Date Written: January 20, 2010
This study demonstrates that the ownership of private equity (PE) funds influences investment performance. The analysis focuses on the universe of PE investments made by Italian closed-end funds from 1999 to 2005. We find that bank-owned funds generally engage in weaker monitoring of the firms in which they invest, because their representatives hold a plurality of offices on boards of directors of such firms, whether PE-backed or not. This leads to lower revenue growth for portfolio firms, and consequently to lower IRR. On the contrary, corporate-owned funds are able to enforce closer supervision of their investments, leading to better performance.
Keywords: Private Equity, Performance, Ownership
JEL Classification: G24
Suggested Citation: Suggested Citation