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Limited Partner Performance and the Maturing of the Private Equity Industry

Charles A. Dice Center Working Paper No. 2013-01

Fisher College of Business Working Paper No. 2013-03-01

55 Pages Posted: 5 Feb 2013 Last revised: 28 Nov 2013

Berk A. Sensoy

Vanderbilt University - Finance

Yingdi Wang

California State University, Fullerton

Michael S. Weisbach

Ohio State University (OSU) - Department of Finance; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: November 27, 2013

Abstract

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.

Keywords: private equity performance, institutional investors

JEL Classification: G11, G23, G24

Suggested Citation

Sensoy, Berk A. and Wang, Yingdi and Weisbach, Michael S., Limited Partner Performance and the Maturing of the Private Equity Industry (November 27, 2013). Charles A. Dice Center Working Paper No. 2013-01; Fisher College of Business Working Paper No. 2013-03-01. Available at SSRN: https://ssrn.com/abstract=2212190 or http://dx.doi.org/10.2139/ssrn.2212190

Berk A. Sensoy

Vanderbilt University - Finance ( email )

401 21st Avenue South
Nashville, TN 37203
United States

Yingdi Wang

California State University, Fullerton ( email )

800 N State College St
Fullerton, CA 92831
United States

Michael S. Weisbach (Contact Author)

Ohio State University (OSU) - Department of Finance ( email )

2100 Neil Avenue
Columbus, OH 43210-1144
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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