Determinants of Sovereign Wealth Fund Investment in Private Equity versus Public Equity

32 Pages Posted: 26 Nov 2012

See all articles by Sofia Johan

Sofia Johan

Florida Atlantic University - Finance; Tilburg Law and Economics Center (TILEC)

April M. Knill

Florida State University College of Business; Florida State University - College of Law

Nathan Mauck

University of Missouri - Kansas City

Date Written: November 15, 2012

Abstract

This paper examines the investments of 19 sovereign wealth funds (SWFs) in 424 firms (both public and private) around the world from 1991 through 2010. The data indicate that SWFs, similar to other institutional investors, are less likely to invest in private equity versus public equity internationally. However, the economic significance of this impact is surprisingly low. Unlike other institutional investors, SWFs are more likely to invest in private equity versus public equity in target nations where investor protection is low and where the bilateral political relations between the SWF and target nation are weak. Surprisingly, cultural differences play a marginally positive role in the choice to invest in private equity investment outside of a SWF’s own sovereign nation. Comprehensively, we find that SWFs act distinctively from other traditional institutional investors when investing in private equity.

Keywords: sovereign wealth fund, private equity, international financial markets, legality, government policy, political relations and regulation

Suggested Citation

Johan, Sofia A. and Knill, April M. and Mauck, Nathan, Determinants of Sovereign Wealth Fund Investment in Private Equity versus Public Equity (November 15, 2012). Available at SSRN: https://ssrn.com/abstract=2181130 or http://dx.doi.org/10.2139/ssrn.2181130

Sofia A. Johan (Contact Author)

Florida Atlantic University - Finance ( email )

777 Glades Rd
Boca Raton, FL 33431
United States

Tilburg Law and Economics Center (TILEC) ( email )

Warandelaan 2
Tilburg, 5000 LE
Netherlands

April M. Knill

Florida State University College of Business ( email )

Tallahassee, FL 32306-1042
United States
(850) 644-2047 (Phone)

Florida State University - College of Law ( email )

425 W. Jefferson Street
Tallahassee, FL 32306
United States

Nathan Mauck

University of Missouri - Kansas City ( email )

5100 Rockhill Road
Kansas City, MO 64110-2499
United States

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