International Investments in Private Equity

Chapter 5. Designing private equity programs in open markets

Chapter Outline

5.1. Bottom-up versus top-down planning87

5.2. Diversification strategies in a closed economy90

5.2.1. Market segments90

5.2.2. Vintage years and market timing92

5.2.3. Industries94

5.3. Diversification in an open economy99

5.4. Determining the asset mix102

5.5. Summary and conclusions105

Once investors have determined their overall allocation to the broad asset classes, they need to decide on strategies to implement the allocation by filling the individual pieces (Sharpe, 2007, p. 207). As far as private equity is concerned, this decision entails allocating capital along four dimensions, that is, (i) the different stages of private equity investing (buyouts, venture capital, ...