Investing outside the box: Evidence from alternative vehicles in private equity

Josh Lerner, Jason Mao, Antoinette Schoar and Nan R. Zhang

Journal of Financial Economics, 2022, vol. 143, issue 1, 359-380

Abstract: Using previously unexplored custodial data, we examine alternative investment vehicles (AVs) in private equity (PE) funds over the last four decades. By 2017, AVs reached 40% of all PE commitments. Average AV performance matches the PE market, but underperforms the main funds of the partnerships sponsoring the AVs. Limited partners (LPs) with better past performance invest in AVs with better average performance, even after conditioning on the general partners’ (GPs’) past records. This result is largely driven by preferential access of top LPs to top AVs. Returns in PE increasingly depend on the match between GPs and LPs and both parties’ outside options.

Keywords: Private equity; Venture capital; Fundraising; Alternative vehicles (search for similar items in EconPapers)
JEL-codes: G23 G24 G29 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:143:y:2022:i:1:p:359-380

DOI: 10.1016/j.jfineco.2021.05.034

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