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International Investments in Private Equity

Book Description

How can private equity investors exploit investment opportunities in foreign markets?  Peter Cornelius uses a proprietary database to investigate and describe private equity markets worldwide, revealing their levels of integration, their risks, and the ways that investors can mitigate those risks.  In three major sections that concentrate on the risk and return profile of private equity, the growth dynamics of discrete markets and geographies, and opportunities for private equity investments, he offers hard-to-find analyses that fill knowledge gaps about foreign markets.  Observing that despite the progressive dismantling of barriers investors are still home-biased, he demonstrates that a methodical approach to understanding foreign private equity markets can take advantage of the macroeconomic and structural factors that drive supply and demand dynamics in individual markets.

  • Foreword by Josh Lerner
  • Teaches readers how to investigate and analyze foreign private equity markets
  • Forecasts private equity investment opportunities via macroeconomic and structural factors in individual markets
  • Draws on data from a proprietary database covering 250 buyout and VC funds and 7,000 portfolio companies.
  • Table of Contents

    1. Cover Image
    2. Table of Contents
    3. Front Matter
    4. Copyright
    5. Dedication
    6. Foreword
    7. Acknowledgements
    8. About the author
    9. List of abbreviations
    10. Chapter 1. Introduction
      1. 1.1. From a closed to an open market view
      2. 1.2. Private equity fundamentals
      3. 1.3. Global markets and investment flows
      4. 1.4. What’s next?
      5. 1.5. Strategic conversations with general partners
    11. Chapter 2. Organization, value creation, and performance
      1. 2.1. Forms of private equity
      2. 2.2. Capital demand, capital supply, and market organization
      3. 2.3. Terms and conditions
      4. 2.4. Value creation and returns
      5. 2.5. Getting exposure to private equity
      6. 2.6. Summary and conclusions
    12. Chapter 3. Global benchmarks
      1. 3.1. Benchmark characteristics
      2. 3.2. Benchmark performance
      3. 3.3. Summary and conclusions
    13. Chapter 4. Private equity in diversified investment portfolios
      1. 4.1. Returns, risk, and correlations
      2. 4.2. The stale price problem
      3. 4.3. Managing dynamic risk
      4. 4.4. Why do allocations to private equity vary so much?
      5. 4.5. Summary and conclusions
      6. Appendix 4.1. Measuring market risk in private equity
    14. Chapter 5. Designing private equity programs in open markets
      1. 5.1. Bottom-up versus top-down planning
      2. 5.2. Diversification strategies in a closed economy
      3. 5.3. Diversification in an open economy
      4. 5.4. Determining the asset mix
      5. 5.5. Summary and conclusions
    15. Chapter 6. Global markets, regional penetration, and country risk
      1. 6.1. Global private equity and the size of regional markets
      2. 6.2. Why do penetration rates vary so much?
      3. 6.3. The quality of the business environment and permissible markets
      4. 6.4. Assessing country risk
      5. 6.5. Summary and conclusions
    16. Chapter 7. Private equity funds and cross-border acquisitions
      1. 7.1. The internationalization of private equity fund investments
      2. 7.2. Measuring cross-border investment flows in buyouts
      3. 7.3. Comparing cross-border private equity fund investments with mutual funds
      4. 7.4. Summary and conclusions
    17. Chapter 8. Cross-border fund commitments, due diligence, and the allocation matrix
      1. 8.1. Cross-border fund-raising: empirical evidence
      2. 8.2. The growing importance of emerging economies as suppliers of private equity capital
      3. 8.3. Due diligence in cross-border commitments
      4. 8.4. The allocation matrix
      5. 8.5. Summary and conclusions
    18. Chapter 9. Regional integration: the case of Europe
      1. 9.1. European financial integration
      2. 9.2. How integrated is Europe’s private equity market?
      3. 9.3. Why has Europe’s private equity market not become more integrated?
      4. 9.4. Summary and conclusions
    19. Chapter 10. Fund investments and currency movements
      1. 10.1. Exchange rate movements: empirical evidence
      2. 10.2. The impact of exchange rate movements on fund investments and benchmarking
      3. 10.3. Skills or (bad) luck?
      4. 10.4. Are exchange rate movements predictable?
      5. 10.5. Currency crashes and early warning systems
      6. 10.6. Should limited partners hedge their exchange rate risk?
      7. 10.7. Summary and conclusions
    20. Chapter 11. What’s next? Private equity in the era of deleveraging
      1. 11.1. Global deleveraging and the future of leveraged finance
      2. 11.2. Ten trends shaping the future of private equity
      3. 11.3. Summary and conclusions
    21. Chapter 12. Chasing deals globally: expansion strategies and risk management of leading private equity firms
      1. 12.1. US private equity firms
      2. 12.2. European private equity firms
      3. 12.3. Private equity firms in nontraditional markets
    22. References
    23. Index