Permanent Capital, Permanent Struggle? New Evidence from Listed Private Equity

Abstract

Listed private equity (LPE) refers to publicly-traded investment companies whose activity is to invest in privately-held companies or in traditional private equity funds. The recent years have witnessed a slew of such listings and many investors were offered exposure to traditional private equity investments (TPE) through LPE. While listed private equity and traditional private equity have the same investment universe, we argue that the performance of the latter does not pertain to LPE. We build a representative dataset of the LPE universe and compare their performance to TPE. We examine whether belonging to indices and having minimum liquidity requirements is linked to performance. Our results suggest that listing significantly deteriorates absolute performance measures but is positively and significantly related to better investment multiples.