Adverse selection and the performance of private equity co-investments
Investors increasingly look for private equity managers to provide opportunities for co-investing outside the fund structure, thereby saving fees and carried interest payments. In this paper, we use a large sample of buyout and venture capital co-investments to test how such deals compare with the r...
| Main Authors: | , , |
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| Format: | Journal article |
| Language: | English |
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Elsevier
2019
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| _version_ | 1826312405511045120 |
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| author | Braun, R Jenkinson, T Schemmerl, C |
| author_facet | Braun, R Jenkinson, T Schemmerl, C |
| author_sort | Braun, R |
| collection | OXFORD |
| description | Investors increasingly look for private equity managers to provide opportunities for co-investing outside the fund structure, thereby saving fees and carried interest payments. In this paper, we use a large sample of buyout and venture capital co-investments to test how such deals compare with the remaining fund investments. In contrast to Fang, Ivashina, and Lerner (2015), we find no evidence of adverse selection. Gross return distributions of co-investments and other deals are similar. Co-investments generally have lower costs to investors. We simulate net returns to investors and demonstrate how reasonably sized portfolios of co-investments significantly outperform fund returns. |
| first_indexed | 2024-03-07T08:28:27Z |
| format | Journal article |
| id | oxford-uuid:f0b81a82-4ec1-44fc-abce-d5a64bfac082 |
| institution | University of Oxford |
| language | English |
| last_indexed | 2024-03-07T08:28:27Z |
| publishDate | 2019 |
| publisher | Elsevier |
| record_format | dspace |
| spelling | oxford-uuid:f0b81a82-4ec1-44fc-abce-d5a64bfac0822024-02-26T10:55:31ZAdverse selection and the performance of private equity co-investmentsJournal articlehttp://purl.org/coar/resource_type/c_dcae04bcuuid:f0b81a82-4ec1-44fc-abce-d5a64bfac082EnglishSymplectic Elements at OxfordElsevier2019Braun, RJenkinson, TSchemmerl, CInvestors increasingly look for private equity managers to provide opportunities for co-investing outside the fund structure, thereby saving fees and carried interest payments. In this paper, we use a large sample of buyout and venture capital co-investments to test how such deals compare with the remaining fund investments. In contrast to Fang, Ivashina, and Lerner (2015), we find no evidence of adverse selection. Gross return distributions of co-investments and other deals are similar. Co-investments generally have lower costs to investors. We simulate net returns to investors and demonstrate how reasonably sized portfolios of co-investments significantly outperform fund returns. |
| spellingShingle | Braun, R Jenkinson, T Schemmerl, C Adverse selection and the performance of private equity co-investments |
| title | Adverse selection and the performance of private equity co-investments |
| title_full | Adverse selection and the performance of private equity co-investments |
| title_fullStr | Adverse selection and the performance of private equity co-investments |
| title_full_unstemmed | Adverse selection and the performance of private equity co-investments |
| title_short | Adverse selection and the performance of private equity co-investments |
| title_sort | adverse selection and the performance of private equity co investments |
| work_keys_str_mv | AT braunr adverseselectionandtheperformanceofprivateequitycoinvestments AT jenkinsont adverseselectionandtheperformanceofprivateequitycoinvestments AT schemmerlc adverseselectionandtheperformanceofprivateequitycoinvestments |