Institutional Investment in Listed Private Equity

Abstract

This paper examines institutional investors’ propensity to invest in a relatively unknown asset class of listed private equity. Based on data provided by LPEQ and Preqin covering 100 institutional investors in Europe in 2008, we find allocations are primarily a function of size, type, location, decision-making authority and liquidity preferences. Investment in listed private equity is more commonly made by institutions that are smaller, private (not public) pension institutions, institutions that have a preference for liquidity, and institutions that are based in the UK. As well, institutions are more likely to invest in listed private equity when investment decision-making is not empowered to a private equity team, an alternative asset class team, or a board/investment committee, but are more likely when decision-making is delegated to an equities team.