Performance in Private Equity: Why are General Partnerships’ Owners Important?
35 Pages Posted: 30 Mar 2011
Date Written: March 1, 2010
Our study shows that the ownership of private equity funds influences the investments’ performances. Our analysis focuses on the universe of PE investments, made by Italian closed-end funds, from 1999 to 2005. We find that bank-owned funds are able to carry into effect a weaker monitoring of the companies in which they invest, because their representatives hold a plurality of offices in boards of directors of firms, either PE-backed or not. This leads to lower revenue growth of portfolio companies and consequently to lower IRR. On the contrary, corporate-owned funds are able to realize a closer supervision of their investments, realizing better performances.
Keywords: private equity, performance, ownership
JEL Classification: G24
Suggested Citation: Suggested Citation