Journal of Private Equity最新文献

{"title":"Editor’s Letter","authors":"F. Mathis","doi":"10.3905/jpe.2019.22.2.001","DOIUrl":"https://doi.org/10.3905/jpe.2019.22.2.001","url":null,"abstract":"Dave bliDe Publisher This Spring 2019 issue of The Journal of Private Equity represents 5,147 private capital funds an increase of more than 40% from 3,484 funds in the market between 2009–2019. A high percentage of the fundraising, especially in North America and Europe, targeted infrastructure and natural resource investments—sectors less sensitive to a slowdown in economic activity. The resurgence in economic activity since the Global Financial Recession in 2008 has contributed to the strong rise in valuations. Thus, 2018 saw a record 5,106 private equity-backed buyout deals up from 4,829 in 2017. The economic recovery over the past decade has helped private equity outperform public equity indexes. This outperformance, was evident particularly in 2018 as public markets became severely impacted by rising interest rates and unexpected economic and political uncertainties. Last year, private equity experienced a positive exit environment which resulted in large distributions to their investors. Thus, growing new and established wealthy investors continue to favor private equity because of this gap in returns. However, as suggested in the front cover quote, high valuations may compress net IRR when it is time to reward LPs and other investors. This compression might narrow the private equity premium over public markets especially if any expected global economic slowdown for 2019 is short-lived, and LP and other investor pressures continue to increase creativity and additional f lexibility in GP fees. This month the annual 2019 Preqin Global Private Equity & Venture Capital Report will be released with a forward by Mark O’Hare, CEO of Preqin. Mr. O’Hare begins by identifying four fundamental forces that have helped the private equity asset class expand and contribute to the global economy. First, Mark identifies the importance that the private equity governance model combines closely engaged mediumto long-term active owners that provide capital, leadership, and technical skills, and energy to lead the companies they invest into performing successfully. Second, O’Hare points out that major global investors must meet their return requirement in an increasingly lower-return environment. Nevertheless, third, Mark emphasizes that private equity has consistently delivered superior risk-adjusted returns compared to public markets. Moreover, the fourth point Mark reinforces that a virtuous circle of LP earnings from private equity portfolios since 2011 has driven the fundraising environment as LP’s have made new private equity fund commitments and investments. The result has been to","PeriodicalId":43579,"journal":{"name":"Journal of Private Equity","volume":"22 1","pages":"1 - 4"},"PeriodicalIF":0.0,"publicationDate":"2019-02-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44293119","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Variant-Triggered Multiple-Based Probabilistic Valuation Model (VTMP) for Private Equity Investments","authors":"Manu Sharma","doi":"10.3905/JPE.2019.22.2.066","DOIUrl":"https://doi.org/10.3905/JPE.2019.22.2.066","url":null,"abstract":"This article explores developing a valuation methodology for private equity investment. Investors use either relative valuation based on multiples for revenue, operating income, and EBITDA, or they use discounted cash flow analysis to estimate a company’s equity price. The approach presented in this article incorporates a combination of relative valuation multiples along with weights for each of the relative valuation variants (revenue, operating income, and EBITDA), as well as probability analysis to develop a valuation methodology. Probability analysis is used instead of discounting future cash flows, as it helps in holding the current valuation while taking into consideration the length of the investment holding period for private equity investments.","PeriodicalId":43579,"journal":{"name":"Journal of Private Equity","volume":"22 1","pages":"66 - 68"},"PeriodicalIF":0.0,"publicationDate":"2019-02-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44771623","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Drivers of Stock Investment Decision: An Orthogonal Linear Transformation Approach","authors":"R. Isidore, P. Christie","doi":"10.3905/jpe.2019.22.2.055","DOIUrl":"https://doi.org/10.3905/jpe.2019.22.2.055","url":null,"abstract":"According to the expected utility theory, investment decisions are a result of the tradeoff between deferred consumption and immediate consumption. Several drivers influence the stock investment decision in the bizarre equity environment. A survey of 436 secondary equity investors residing in Chennai, India, explores the influence of 20 variables on their stock investment decision. Using principal component factor analysis followed by varimax rotation, the 20 variables became five key factors of five decision-making tools. Including fundamental analysis, economic analysis, industry analysis, company analysis, advocate recommendation, and technical analysis. Financial advisors and wealth managers may use this research to identify the tool used by their clients (investors) to make stock investment decisions, and hence, guide them accordingly.","PeriodicalId":43579,"journal":{"name":"Journal of Private Equity","volume":"22 1","pages":"55 - 65"},"PeriodicalIF":0.0,"publicationDate":"2019-02-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47988960","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"The “Small World” of Private Equity Funds","authors":"Gianfranco Gianfrate, Francesco Brambati","doi":"10.3905/jpe.2019.22.2.027","DOIUrl":"https://doi.org/10.3905/jpe.2019.22.2.027","url":null,"abstract":"The authors explore the structure of the network of relationships between 225 private equity firms arranging “club deals” between 2000 and 2017 with different private equity firms. After using the tools of social network analysis to assess this structure and the prominence of the players within it, they find that the network is dominated by few central players, suggesting the existence of a “small world” of relationships. Some players are found to act as a brokers of relationships between other players, despite having a lower number of connections, increasing the resources exchanged in the network. Network centrality is shown to have the largest economic effect on the likelihood of club deal formation. This finding supports the idea that the establishment of private equity consortiums is not merely for capital constraint motivations or portfolio diversification, but also to increase social capital and ensure future deal flow.","PeriodicalId":43579,"journal":{"name":"Journal of Private Equity","volume":"22 1","pages":"27 - 35"},"PeriodicalIF":0.0,"publicationDate":"2019-02-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47812189","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Mature and Not Mature Enough: Comparing Private Equity in Developed and Emerging Markets","authors":"Darek Klonowski","doi":"10.3905/jpe.2019.22.2.009","DOIUrl":"https://doi.org/10.3905/jpe.2019.22.2.009","url":null,"abstract":"International private equity faces transition issues. In developed markets, it show signs of industry maturation (i.e., lower returns compared with the past, slower rates of growth in the value of fundraising and investing, and ever-increasing accumulation of “dry powder”). In contrast, private equity in emerging markets experiences some evolutionary pressures (i.e., volatile but growing returns, inconsistent growth rates in key statistics, and institutional challenges). This dichotomy creates multiple problems for limited partners and general partners regarding asset allocation, liquidity considerations, and search for premium returns. This article evaluates these issues in detail.","PeriodicalId":43579,"journal":{"name":"Journal of Private Equity","volume":"22 1","pages":"18 - 9"},"PeriodicalIF":0.0,"publicationDate":"2019-02-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43436339","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"The Role of Monetary Policy in Achieving Economic Stability and Growth in Iraq 2011–2016","authors":"Ali Hassan Zayer","doi":"10.3905/jpe.2019.22.2.083","DOIUrl":"https://doi.org/10.3905/jpe.2019.22.2.083","url":null,"abstract":"This article analyzes the effectiveness of monetary policy in achieving economic stability and growth for Iraq after a new law gave the Central Bank full independence from government intervention. The new authority gave the Central Bank the ability to control the money supply in order to achieve price stability. In addition, the Central Bank is now responsible for exchange rate stability and the building of strong foreign currency reserves. However, due to lack of investment vision, thus far the country has failed to exploit the more stable environment to achieve growth and economic prosperity.","PeriodicalId":43579,"journal":{"name":"Journal of Private Equity","volume":"22 1","pages":"83 - 90"},"PeriodicalIF":0.0,"publicationDate":"2019-02-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42256690","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Private Equity Program Breadth and Strategic Asset Allocation","authors":"Alexander Rudin, Jason Mao, N. Zhang, A. Fink","doi":"10.3905/jpe.2019.22.2.019","DOIUrl":"https://doi.org/10.3905/jpe.2019.22.2.019","url":null,"abstract":"It is quite often the case that investors form views on private equity program return and cash flow profiles by analyzing broad-based swaths of the private equity industry, while side-stepping idiosyncratic risks associated with narrower, realistic baskets of private equity pools. This article remedies this by performing an empirical analysis of private equity historical performance while accounting for program diversification. Comparing a private equity program to peer group averages is somewhat unfair, as such methodology favors larger programs, arguably without merit. The authors explain a way to correct for this bias. Finally, the authors present a probabilistic strategic asset allocation framework for private equity programs that help make informed trade-offs between breadth, strategy mix, and associated costs.","PeriodicalId":43579,"journal":{"name":"Journal of Private Equity","volume":"22 1","pages":"19 - 26"},"PeriodicalIF":0.0,"publicationDate":"2019-02-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43924665","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Attention Private Equity and Venture Capitalists: Do You Know How to Manage Investment Portfolio Trade Risks?","authors":"Doreen M. Edelman, A. E. Baker","doi":"10.3905/JPE.2019.22.2.036","DOIUrl":"https://doi.org/10.3905/JPE.2019.22.2.036","url":null,"abstract":"In today’s trade policy environment, it seems as if there is a new business risk every day. One day, it is sanctions on Chinese entities for doing business in North Korea; the next day, it is the activities of Russian oligarchs. Then companies are hit with four waves of increased import duties on steel, aluminum, and most raw materials and finished products from China. Even if firms are not importing on their own, US manufacturers are receiving “the letter” stating that they must pay additional fees on parts and other inputs. Sometimes the affected products simply involve imported packaging or aluminum can made in America from imported raw material. With so much change and uncertainty, how do investors identify and evaluate these and other trade-related risks that may impact their portfolio companies?","PeriodicalId":43579,"journal":{"name":"Journal of Private Equity","volume":"22 1","pages":"36 - 40"},"PeriodicalIF":0.0,"publicationDate":"2019-02-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48428484","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"On Contango, Backwardation, and Seasonality in Index Futures","authors":"Mohd Asraf Abd Wahab, Azhar Mohamad, I. Sifat","doi":"10.3905/jpe.2019.1.076","DOIUrl":"https://doi.org/10.3905/jpe.2019.1.076","url":null,"abstract":"The authors investigate contango and backwardation formations and seasonality traits in Malaysia over 22 years spanning 1995 to 2017. Employing graphical observations and statistical tests, contango and backwardation traits appear through market expectations, seasonality, cost of carry model predictions, and index volatility. Unit root, cointegration, and Granger causality tests are employed to assess the existence of long-term relationships between KLCI (cash/spot index) and FKLI (stock index futures) contracts and the direction of the causality relationship. The results are suggestive of cointegration between the futures price index and the spot index in Malaysia. Moreover, a long-run relationship exists between the two variables—a result of backwardation’s predictive ability to find cash market bottoms. Malaysian markets show backwardation in April to June and August, while December is consistently in contango and exhibits moderately high success in the use of a cost-of-carry model in predicting contango and backwardation.","PeriodicalId":43579,"journal":{"name":"Journal of Private Equity","volume":"22 1","pages":"69 - 82"},"PeriodicalIF":0.0,"publicationDate":"2019-02-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42564107","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Case Study ista: Digging Deep into CVC’s Long-Term Investment","authors":"Ilja Schaab, Eric Frére","doi":"10.3905/jpe.2019.1.075","DOIUrl":"https://doi.org/10.3905/jpe.2019.1.075","url":null,"abstract":"In 2017, CVC sold its target company, ista to a Chinese infrastructure investor after an investment period of 14 years. This transaction was the largest private equity exit from a German target company up to date. The authors investigate the transaction structuring and financing as well as CVC’s impact on the financial performance and business development of the target company. The analysis shows that ista grew steady regarding revenue and EBITDA, employed more people, and performed comprehensible internationalization and business area extension decisions. However, the company also seems to be condemned to success. With each new transaction cycle, the level of liabilities and interest payment obligations increased. ista had to grow and increase efficiency continuously to meet the expectations of debt, mezzanine and equity capital providers. This article provides a holistic overview of the investment phase, enabling the reader to form an opinion about CVC’s long-term involvement and to adopt the strategies used in this practical application.","PeriodicalId":43579,"journal":{"name":"Journal of Private Equity","volume":"22 1","pages":"41 - 54"},"PeriodicalIF":0.0,"publicationDate":"2019-02-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49506894","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}