Practical Applications of An Empirical Analysis of Investment Return Dispersion in Emerging Market Private Equity

Abstract

<h3>Practical Applications Summary</h3> Is private equity investment really riskier in emerging markets than in developed markets? In <b>An Empirical Analysis of Investment Return Dispersion in Emerging Market Private Equity</b>, published in the Fall 2017 issue of <b><i>The Journal of Private Equity</i></b>, <b>Josh Lerner</b> (<b>Harvard Business School</b>) and <b>Mark Baker</b> (then an analyst at <b>Bella Research</b>) tackle this question by looking at the dispersion of returns at the level of individual transactions. Through analysis of deal-level data, they show that internal rates of return are not significantly more dispersed in emerging markets than they are in developed markets, and-interestingly-that ratios of total value to paid-in capital are actually more widely dispersed in developed markets. <b>TOPICS:</b>Private equity, emerging, performance measurement, statistical methods