Co-Investments of Sovereign Wealth Funds in Private Equity

McCahery, Joseph A.; de Roode, Alexander

doi:10.2139/ssrn.2881231

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Co-Investments of Sovereign Wealth Funds in Private Equity

TILEC Discussion Paper No. 2016-035

50 Pages Posted: 6 Dec 2016

See all articles by Joseph A. McCahery

Joseph A. McCahery

Tilburg University - School of Law; European Banking Center (EBC); Tilburg Law and Economics Center (TILEC); European Corporate Governance Institute (ECGI)

Alexander de Roode

Robeco Asset Management, Quantitative Investment Research; Netspar

There are 2 versions of this paper

Date Written: November 23, 2016

Abstract

Direct investments are the preferred vehicle for large institutional investors to have control over their portfolio investments. We study the deal structure of direct investments by sovereign wealth funds (SWFs) in private equity transactions. We find that SWFs shift from investing in private equity funds to originating and co-investing together with private equity funds in deals. The choice for co-investment affects deal size, risk-bearing, fees and returns. Overall, our results show the strong interest of SWFs in direct investments in developed markets.

Keywords: Sovereign wealth funds, Private equity, Venture capital deals, Financial markets, direct investments

JEL Classification: G32, G15, G38

Suggested Citation: Suggested Citation

McCahery, Joseph A. and de Roode, Alexander, Co-Investments of Sovereign Wealth Funds in Private Equity (November 23, 2016). TILEC Discussion Paper No. 2016-035, Available at SSRN: https://ssrn.com/abstract=2881231 or http://dx.doi.org/10.2139/ssrn.2881231