Private Equity Performance Returns, Persistence and Capital Flows by by rub18840


									          Private Equity Performance: Returns, Persistence and Capital Flows


       Steve Kaplan, University of Chicago Graduate School of Business, NBER
       Antoinette Schoar, MIT Sloan School of Management, NBER and CEPR

This paper investigates the performance of private equity partnerships
using a unique data set of individual fund returns collected by Venture Economics. Over
the entire sample period, the average fund returns do not exceed those of the S&P 500.
At the same time, we find a large degree of heterogeneity among fund returns. Those
returns persist strongly across funds by private equity partnerships. The returns also
improve with firm experience. Better performing funds are more likely to raise follow-on
funds and raise larger funds than more poorly performing firms. This relationship is
concave so that top performing funds grow more slowly than the market average. Finally,
we find that funds that are raised in boom times (and firms that are started in boom times)
are less likely to raise a follow-on fund, suggesting that these funds perform worse.
Several of these results differ substantially from those for mutual funds.

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