International Investments in Private Equity

Chapter 2. Organization, value creation, and performance

Chapter Outline head

2.1. Forms of private equity16

2.2. Capital demand, capital supply, and market organization19

2.3. Terms and conditions21

2.4. Value creation and returns23

2.4.1. Buyouts23

2.4.2. Venture capital31

2.4.3. Performance differences, persistence, and selection skills34

2.5. Getting exposure to private equity37

2.6. Summary and conclusions42

Appendix 2.1: Private equity fund structures around the world44

Private equity has emerged as a separate asset class since the early 1980s. Although investments in private equity funds had been made before, US institutional investors remained severely restricted in committing capital to high risk and illiquid asset classes. This changed in ...