19. Jun 2024
Cycles in Private Equity Markets
In this study, Michel Degosciu, Karl Schmedders and Maximilian Werner analyze three decades of return data from listed private equity (LPE) companies, focusing on the return averages and volatilities of two notable market indices and comparing them to a global equity index. Their fndings indicate that LPE has generated higher average returns, commensurate with its higher volatility, in comparison to the global index. Additionally, they observe that, on average, LPE companies have traded at a discount to their book values since the Great Financial Crisis. Importantly, this discount exhibits a strong negative correlation with an indicator of macro-financial stress, which emerges as a predictive factor for LPE market performance.