Combining Banking with Private Equity Investing
Review of Financial Studies, Vol. 26 (9), 2139-2173, June 2013
47 Pages Posted: 19 Sep 2014 Last revised: 15 Feb 2018
Date Written: April 1, 2013
Bank-affiliated private equity groups account for 30% of all private equity investments. Their market share is highest during peaks of the private equity market, when the parent banks arrange more debt financing for in-house transactions yet have the lowest exposure to debt. Using financing terms and ex-post performance, we show that overall banks do not make superior equity investments to those of standalone private equity groups. Instead, they appear to expand their private equity engagement to take advantage of the credit market booms while capturing private benefits from cross-selling of other banking services.
Keywords: Private equity, banks, credit cycles
JEL Classification: G20, G21, G24
Suggested Citation: Suggested Citation