Listed Private Equity Companies in Major Stock Exchanges

Since last three decades, there have been dramatic increases in the number of private equity, and the increase in the number of the listed private equity has been due to the increase in the they have outperformed in stocks. (Schmidt,2004).

Typically, private equity trades in recognised stock exchanges, and private equities have organised markets that allow for buying and selling of private equity portfolios. In the London Stock exchange, markets for private equity markets have risen to $31 billions since 1976 to 2009. Analysts have argued in the private equity market, there is minimum marginal reduction in markets risks where portfolio sizes increase from 15 to 200. Typically, various private equity analysis also reveal that there are big different between optimal allocations of assets and maximizing performance ratios, which generally observed to be between 3% and 65%. (Schmidt, 2004).

Research conducted by Phalippou and Zollo (2005) support this scenario by arguing that private equity funds has increased from $5 billions in 1990 to $300 billions in 2004, which amount to $1 trillions in over 25 years. Although, arguments from various quarters reveal that fund managers play significant roles in strategic importance of private equity firms. Generally, with fund investment carried out by limited partnership where private equity firms serve as general partners, capital investments argely provided by institutional investors and wealthy individuals that influence accumulation of equity funds. (Kaplan and Schoar).

However, private equity firm provide shareholders an opportunity to gain exposure to the management fees. It should be noted that the primary responsibility of private equity firms are to upgrade the shareholders values. To achieve this objectives, management of private equity firms invest in various companies to increase their equity funds. For example, Blackstone Group has raised approximately $44 billions dollars in capital investment since 1987, and by 2008, private equity operation of Blackstone Group had been approximately $25.5 billions. (The Blackstone Group).

Despite the increase in private equity benchmark, commentators still remark that there is still limited understanding on private equity funds and private equity firms. This thesis will centre its study on two different kinds of listed private equity firms and funds.

Typically; a private equity fund or similar investment vehicle allow investors that would otherwise not able to invest in a traditional private equity limited partnership to gain exposure to a portfolio of private equity investments. Study on both equity portfolios generate research problem discussed in next section.

Statement of problem

Studies have revealed that private equity have increased their financial portfolios since 1970, and this increase in funds has risen till the middle of 2000s. Their significant performances are attributed to volume of capital that have increased in private equity portfolios. Study on private equity fund and private equity firm generate research problem. To solve these research problem, there is need to provide proposed research aims and objectives.

Research aim

To analyse the performances of listed private equity funds and equity private firms.

Research objectives

To investigate performances of listed private equity companies in major stock exchanges.

To investigate performances of some private equity firms.

To compare performances of private equity with private equity firms.

To investigate various risks that private equity are facing during recent global economic crunch.

Fulfilling the research aims and objectives generates the following research questions.

Research Questions

Why is it that Private Equity companies go public? Are there any benefits for shareholders that invest in the private equity companies?

Are performances of share prices of Private equity companies better than those of benchmark indices?

How do listed private equity vehicles differentiate themselves from private equity firms?

Why are there significantly more investments funds in private equity companies than private equity firms?

Which kind of listed vehicle is more attractive under risk-return criteria in different market cycles?

Which vehicle is expected to be out-performing than other in upcoming economic market boom?

Organisation of the Study

Thesis will be organised in five chapters.

Chapter 1 will provide an introduction to the essence of research topic, which will provide insight into research aim and objectives. There will be a brief introduction of private equity fund, private equity in chapter 1. Moreover, statement of problems and research questions will address the investigations.

Chapter 2 will provides a review of literatures to the study. Literatures on the equity funds and equity firms will be reviewed to analyse previous research on the topic to be investigated.

Chapter 3 provides methodology, which are methods of collecting data, sample population, and data analysis.

Chapter 4 will present findings of the whole thesis. From findings the aims and objectives will be achieved, and the thesis will also answer the research questions.

Chapter 5 will provide discussion , which include summary of the whole thesis.

Next section provides literatures review that discussed about the proposed study.

Literatures review

The section reviews the related literatures on the performances of private equity listed companies. In addition, literatures will be reviewed to establish whether private equity firms perform better than private equity companies. Typically, during recent financial crisis, it is essential to analyse different kinds of listed vehicles under risk returns criteria in different market cycles. Literatures will also establish better investment vehicle in upcoming economic boom.

Kaplan and Schoar argue that the tracking records of most private equity companies reveal that the private equity companies perform considerably well during economic boom. Data presented by Phalippou (2009) points out that there is significant increase in equity markets, and the private equity funds increase from $3.5 billions in 1985 to over $300 billions in 2007. In addition, data reveals that, there are more than $1 trillions assets estimated to be in procession of Private equity companies in 2007.

Kaserer and Diller (2004) support argument provided by previous literature by arguing that private equity has experienced an increase in public awareness in Europe due to positive impacts of private equity on economic growth, which has made private equity to become one of the most important alternative asset classes. Typically, increase their capital accumulation has increased from 4.2billions Euro in 1992 to 48 billions in 2000. The overall belief of super performances of equity funds is as a result of low risks of private equity companies; however there is still debate over this issue. Phalippou and Zollo (2005) argue that many institutional investors heavily invest in private equity funds based on the belief that they will reap market returns. However, during recent global financial crisis, large percentages of the private equity companies perform poorly, and most of them record lower performances. (Kaplan and Schoar).

Report from EMPEA (2009) reveal there are severe depression in prices of equity assets during recent ongoing global financial crisis, and there is likely that this financial downturn will continue in the next few years and thereby affecting prices of private equity assets.

To validate the arguments of the literatures reviewed, it is essential for data collection through proposed research methodology.


This section provides the methods of data collection for the proposed thesis. Thesis will analyse data historical share price and volatility, which will help the author to make predict about the future of the share prices. The historical past share prices will be used to analyse the future share prices in the market. For example, data from historical share prices will be collected from the Bloomberg database, and the analysis of the data will help to predict the future prices in the market.

Data analysis

To ensure reliability of data for the proposed research, the author uses quantitative and qualitative techniques for data analysis, and statistical procedures will be used to achieve the objective results. Regression analysis will be used to ascertain the statistical significance, and the degree of confidence in the data collected. (Sykes)


Thesis will choose London stock exchange, and New York Stock exchange in order to analyse the historical share prices in order to predict the future of the share prices of private listed equity firms

Time Frame

Due to the importance of this proposed research, the author aims to complete the proposed thesis within 3 years, and make it available to the general public.

Research limitations

This research aims to examine the performances of listed private equity firms , and performances with private equity funds. There can be unforeseen limitations that can arise from data collection from the share prices of the listed private equity firms. Typically, some list equity firms may not have adequate historical data in the share prices that can allow prediction into future. Thus, this limitation will make the author to be cautious on the selection of listed private equity firms and funds to be studied in this thesis.


The author will use Harvard style for references


  1. EMPEA (2009), The Emerging Markets Private Equity Quarterly Review, Emerging Markets Private Equity Association.
  2. Phalippou, L, Zollo, M, (2005), What Drives Private Equity Fund Performance? University of Amsterdam, Faculty of Economics and Econometrics, Finance group.
  3. Kaserer, C, and Diller, C, (2004), European Private Equity Funds – A Cash Flow Based Performance Analysis, Center for Entrepreneurial and Financial Studies (CEFS) and Department for Financial Management and Capital Markets Technische Universit¨at M¨unchen.
  4. Kaplan, S, Schoar, A, (nd), Private Equity Performance: Returns, Persistence and Capital Flows, University of Chicago, School Booth of Business.
  5. Phalippou, L, (2009), Risk and Return of Private Equity: An Overview of Data, Methods and Results, Social Science Electronic Publishing, Inc.
  6. Sykes, A, O, (nd), The Inaugural Coase Lecture, An Introduction to Regression Analysis, Chicago Working Paper in Law & Economics.
  7. Schmidt, D, (2004), Private Equity-, Stock- and Mixed Asset-Portfolios: A Bootstrap Approach to Determine Performance Characteristics, Diversification Benefits and Optimal Portfolio Allocations, Social Science Electronic Publishing, Inc.
  8. The Blackstone Group.

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