Private Equity Research Articles

Conceptual foundations of the movement of innovative capital in conditions of priority development of the “green” economy

The article provides a justification for the process of forming the vector of development of the Green Economy, identifies the features of Green Investments in the modern economy. Green investment is the allocation of financial capital to projects or companies that focuses primarily on environmentally friendly technologies, sustainable practices, and natural resource conservation. The purpose of green investments is to develop the Green Economy, to support businesses that contribute to environmental protection while generating profits for investors. “Green investments play a crucial role in the transition to the Green Economy and are the basis for combating climate change and implementing sustainable development practices.The authors detail the factors of capital flows in the context of innovations in the Green Economy. External factors are political, geographical, social, and natural. The article characterizes market instruments of green investments. Among the market instruments, the following are identified: green bonds, green mutual funds, exchange-traded funds, green private equity and venture capital, impact investing, carbon credits and compensation. The authors determines the prospects for innovative green economy projects. It is determined that green investments have great potential for obtaining long-term economic, social and environmental benefits, in particular, reducing carbon emissions and increasing resource efficiency.

Private Equity Interim Performance and Its Predictability

Private Equity Interim Performance and Its Predictability

TO INVESTIGATE THE TREND AND EXPANSION OF PRIVATE EQUITY INVESTMENT IN INDIA

This paper delves into India's burgeoning realm of private equity investment, examining its growth trends, sectoral preferences, and risk profile. Utilizing log-lin regression analysis of detailed data from 2012 to 2022, we unveil insights into deal value and volume for investments and exits. Our findings paint a nuanced picture. While India presents compelling opportunities, it also harbours inherent risks for private equity players. Notably, 2020 witnessed the highest influx and divestment of capital, highlighting the dynamic nature of the market. Construction, information technology, and real estate are the hottest sectors, attracting significant investor attention. The quantitative analysis reveals a steady annual growth of 5.4% in private equity investment value, further bolstered by a notable 3.4% weekly increase. These robust figures solidify India's position as a burgeoning private equity hub. Furthermore, we venture beyond historical patterns, offering valuable predictions for the next ten years. This vital forecast equips investors and stakeholders with critical insights to navigate the evolving landscape of Indian private equity. In conclusion, this study comprehensively analyses private equity's rise and inherent risks within the Indian context. Through data-driven insights and future projections, it empowers informed decision-making and strategic planning for navigating the promising yet dynamic realm of private equity in India.

The For-Profit Side of Public U: University Contracts with Online Program Managers

Online enrollments in public universities have soared, in part because of universities’ increasing reliance on for-profit online program managers (OPMs) for everything from instructional design to student recruitment. However, scholarship has indicated that OPMs may play a role in producing predatory forms of inclusion in higher education for marginalized students. To identify mechanisms through which this might occur, the authors conduct a mixed-methods analysis of 161 contracts between OPMs and two- and four-year public universities, an original database of third-party financing structure, and university webpages. The analysis identifies several contract features—targeting, extraction, opacity, and captivity—that may help concentrate marginalized students in extractive or exploitative online programs at public universities. The authors also show that OPMs funded by private equity or venture capital are most likely to include contract features that incentivize aggressive revenue production and promote the recruitment of marginalized students in online, but not in-person, programs.

The Looming Future of Private Equity in Plastic Surgery.

Private equity acquisition of independent private practices has grown dramatically in the last decade, with private equity firms increasingly investing in surgical specialties that practice in outpatient ambulatory centers. This trend has slowly started to creep into plastic surgery; therefore, understanding the concepts of private equity ownership in healthcare and its benefits and risks is critical. This article provides a fundamental economic background on private equity, describes its current state in healthcare, including trends in plastic surgery, and provides recommendations for plastic surgeons considering private equity acquisition.

Current Concepts in the Business of Orthopaedics.

Practice management within orthopaedic surgery demands a multifaceted skillset including clinical expertise, technical proficiency, and business acumen, yet the latter is rarely taught during orthopaedic training. As the healthcare system evolves in the United States, surgeons continue to face challenges such as decreasing reimbursements, increased regulatory burdens, and potential for practice acquisition. To remain competitive and provide exceptional care for patients, orthopaedic surgeons must cultivate a business-minded approach. This article highlights the growing significance of the business of orthopaedics and offers guidance on ambulatory surgical center ownership models, effective management of ancillary services, the effect of private equity in orthopaedic practice, real estate investment opportunities in medical office buildings, and the importance of brand recognition. By understanding these concepts, orthopaedic surgeons can exercise greater control over their practice's finances while providing quality care for their patients.

Funding gap in the Hungarian venture capital market

Our study investigates the size of the so-called financing gap in the Hungarian venture capital market, i.e. the amount that can potentially be lent out, which is currently not covered by the Hungarian financial intermediary system on a market basis. The relevant literature will be reviewed to assess the performance and characteristics of the Hungarian market. The Hungarian financial intermediation system, traditionally based on banking, underperforms in all segments of capital market financing, even by Central and Eastern European standards. In our research, we sought to find out whether the available sources of venture capital could meet market needs. Both the number and volume of transactions in the domestic venture capital and private equity markets are low by international standards, and the role of the state is below the average for CEE countries. The novelty of our analysis lies in the fact that there is no similar literature available in Hungary. Our estimation based on linear regression revealed a strong relationship between venture capital investment and current GDP. The difference between the estimated potential risk capital stock and the annual averages zrealized clearly shows the market gap. In addition to the public programmes already implemented, the annual amount of risk capital missing from the domestic market is in the order of EUR 12.5-31.6 million, i.e. roughly HUF 5.1-13.3 billion per year at the euro exchange rate at the time of analysis. If this resource were available, domestic startups would have greater growth opportunities. Our analysis suggests that not only a state presence but even an increase in it, seems justifiable (or at least worth exploring). The research was supported by the National Research, Development and Innovation Office (FK-142492).

Forecast model for the development of financing of agricultural sector companies through private investment funds

The article presents the problems of development of the private equity fund market in Kazakhstan, examines the current structure of the private equity fund market and its main participants; the impact of private equity fundson the performance of companies in the agro-industrial sector is discussed. The purpose of the work is to obtain a quantitative assessment of the company’s performance through its investment by a private equity fund based on the use of economic and mathematical modeling. Private equity funds, entering the share capital of the invested company, not only bring material investments, but also improve the company’s management. The paper highlights factors that influence the efficiency of the invested company the introduction of corporate governance practices, systematic risk management, and the quality of human capital. Based on economic and mathematical modeling, a quantitative assessment was made of the impact of cooperation of a private equity fund on the company’s financial performance operating profitability and return on equity. The increase in the estimated operating profitability in the post-investment stage proves the authors’ hypothesis about the positive impact of private equity funds on the company’s performance.

Sponsor reputation and agency conflicts in SPACs

We investigate the agency conflict between sponsors and investors in Special Purpose Acquisition Companies (SPACs) and the role of sponsor reputation in such conflict. We find that the effect of reputation depends on whether sponsors are repeat or occasional players in financial markets. SPACs sponsored by private equity firms, who face reputational concerns due to frequent interactions with investors, conduct a more virtuous target selection process as they are less likely to merge but post-merger returns are significantly better. On the other hand, former executives of renowned companies who occasionally launch SPACs make deals more lucrative to themselves, with no benefits to investors.

Panacea for M&A dealmaking? Investor perceptions of earnouts

We survey 129 investors from private equity firms, investment banks, corporate M&A and other M&A-related roles about their perception of earnouts. The results indicate that earnouts are applied to reduce information asymmetries and to bridge negative agreement zones in transactions. While these findings are largely aligned with the academic perspectives, we reveal several discrepancies to existing theory with respect to motives, valuation and associated costs. This is the first study that incorporates the view of M&A professionals and thus attempts to bridge the gap between academics and professionals. In addition, it provides impulses for further academic work on earnouts.

Private Equity and Plastic Surgery.

Private Equity and Plastic Surgery.

Fragmented mass ornaments: academic image, aesthetics, and brand cohesion of commercially-partnered international branch campuses

ABSTRACT This study explores neo-liberal marketisation aspects of commercially-partnered international branch campuses (IBCs), focusing on perceptions of university brand image, aesthetics, and cohesion. Commercially-partnered campuses refer to transnational (TNE) universities that are entered into private equity or for-profit partnerships in a branch’s host country. The present study is focused on Anglo-Western universities with for-profit IBC partnerships located in the economic free zones in the United Arab Emirates. Often, publicly available information on these partnerships is obscured to emphasise the home campus brand. Thus, the research aims to provide insight into how IBC academics and student service workers perceive IBC branding and its relationship to academic image and, to a certain degree, academic practice. Data collection instruments include semi-structured interviews and participant reflective responses to social media platforms, which are examined theoretically using a critical realism approach. Through a critical thematic analysis of qualitative accounts, the findings suggest two significant emergent themes which influence participant experience on IBCs: (1) institutional fragmentation, (2) limited authenticity. The study identifies a need for more genuine branding to increase the perceptions of the academic legitimacy of IBCs.

Evaluation of the Sustainability Performance of a Private Equity Deposit Bank with the Hybrid ÇKKV Model: The Case of Akbank for the Period 2009-2021

Bu çalışmanın amacı Türkiye’de faaliyette bulunan özel sermayeli bir bankanın sürdürülebilirlik performansını hibrit bir ÇKKV modeli ile değerlendirmektedir. Bu amaç doğrultusunda çalışmada LOPCOW ve CoCoSo yöntemi kullanılmıştır. Analiz dönemi 2009-2021 olarak belirlenmiştir. Sürdürülebilirlik performansının ölçülmesi için üç farklı kategoride; ekonomik, sosyal ve çevresel olmak üzere toplam on altı adet performans göstergesi derlenmiştir. Analiz sonuçlarına göre, LOPCOW yönteminde, ekonomik kategoride en önemli kriter öz kaynak kârlılığı olmuştur. Sosyal kategoride ise en önemli kriter, toplam atm sayısı olarak tespit edilmiştir. Çevresel kriterde ise, en önemli kriter kapsam 1 emisyonu olmuştur. CoCoSo yönteminde ise, sürdürülebilirlik performanslarının en iyi olduğu dönemler sırası ile 2018, 2017 ve 2014 yılları şeklinde ifade edilebilir.

Private equity and entrepreneurial investments: understanding the determinants of founder-CEO succession in the Caribbean

ABSTRACT Our study develops a contextually embedded institution-theoretic model of the major influences precipitating entrepreneurial founders’ leadership succession. Drawing on a unique sample of 184 listed firms from 10 national securities markets across the Caribbean region, we find that both business group (BG) and private equity (PE) ownership are associated with an increased likelihood of founder retention. The results also show that firms’ adoption of shareholder value corporate governance negatively moderates the BG main effect, while positively moderating its PE counterpart. We argue that this is reflective of a simpler lifecycle in emerging economies centred on one major transition, namely the transition from internal to external resource provision.

Tail risks and private equity performance

We examine the drivers of private equity in response to the fully exogenous Covid-19 shock, employing listed private equity as a proxy for traditional non-listed private equity. This approach enables us to reliably measure firm characteristics and performance in real-time. Listed private equity firms, on average, underperformed significantly during the crisis, with a performance drop ranging from 9.2 % to 43.6 %, depending on the model used. However, there is substantial cross-sectional variation driven by unique firm-level attributes including access to capital, liquidity, transparency, and ownership structure. Listed private equity with better access to capital and higher transparency shows resilience during the crisis, while higher illiquidity and opacity exacerbate the negative effects. This study offers early evidence on Covid-19′s impact on private equity firms, highlighting value drivers and performance dynamics of this alternative asset class during a period of extreme tail risk.

The immediate effects of private equity acquisition of urology practices on the management of newly diagnosed prostate cancer.

Some worry that physician practices acquired by private equity may increase the use of services to maximize revenue. We assessed the effects of private equity acquisition on spending, use of treatment, and diagnostic testing in men with prostate cancer. We used a 20% sample of national Medicare claims to perform a retrospective cohort study of men with prostate cancer diagnosed from 2014 through 2019. The primary outcome was prostate cancer spending in the first 12 months after diagnosis. Secondary outcomes included the use of treatment and a composite measure of diagnostic testing (e.g., imaging, genomics) in the first 12 months after diagnosis. Multilevel modeling was used to adjust for differences in patient and market characteristics. The effect of practice acquisition on each outcome was assessed using a difference-in-differences design. There were 409 and 4021 men with prostate cancer managed by urologists in acquired and nonacquired practices, respectively. After acquisition, prostate cancer spending was comparable between acquired and nonacquired practices (difference-in-differences estimate $1182, p = 0.36). Acquisition did not affect the use of treatment (difference-in-differences estimate 3.7%, p = 0.30) or the use of diagnostic testing in men who were treated (difference-in-differences -5.5%, p = 0.12) and those managed conservatively (difference-in-differences -2.0%, p = 0.82). In the year following acquisition of urology practices, private equity did not increase prostate cancer spending, the use of treatment or diagnostic testing in men with prostate cancer. Future work should evaluate the effects of private equity acquisition on practice patterns and quality over a longer time horizon.

Private Equity and Life Insurers

Private Equity and Life Insurers

A Role of Private Equity Markets in Korea: An Overview of Literature on Hedge Funds and Private Equity

A Role of Private Equity Markets in Korea: An Overview of Literature on Hedge Funds and Private Equity

ESG consideration in venture capital: drivers, strategies and barriers

Purpose There is an increasing awareness of environmental, social and governance (ESG) factors in the private equity (PE) environment. While many studies deal with the implementation of ESG in the field of PE, only little is known about how the subcategory venture capital. Therefore, this study aims to answer the questions: What are the motivations for venture capitalists to consider ESG in their investment decisions? How do they implement it and what are the barriers that hinder them? Design/methodology/approach An inductive study based on semi-structured interviews with 11 investors of venture capital firms (VCs) was conducted to explore the drivers, the barriers and the strategies to implement ESG in the investment decision-making. Findings All investors perceive that ESG will play a major role in investment decisions in the long term. VCs have seen benefits primarily in terms of performance and commercialization of startups that incorporate the ESG aspect. Limited partners are a driving force for change in this process. No standardized framework and lack of resources for implementation are mainly assumed as barriers. Practical implications Politics and industry might support particularly smaller VCs in their implementation by providing standardized frameworks. Owing to increasing awareness and interest of ESG criteria among VCs, startups should also address these criteria. Originality/value This paper contributes to the literature by examining how ESG is currently considered in VCs’ decisions and what challenges they face. Therefore, this research contributes to the understanding of the decision-making process among venture capitalists.

Institutional logics and organizational filters: Differential responses to innovation and environmentalism in China’s cleantech sector

While the institutional logics perspective has been applied to explore various empirical contexts, less is known about how different organizations respond differentially to the pressures that are imposed by logics. We investigate how different organizational attributes moderate institutional logics differently by using a proprietary dataset of venture capital and private equity (VC/PE) investment in cleantech startups in China. We first delineate two distinct logics—market and proenvironmental—that shape VC/PE investment across different regions. Moreover, we identify two organizational attributes—state ownership and business model—which moderate the two logics differently. Whereas the business model of venture investment firms (VC vs. PE) effectively resonates with the market logic, state ownership fails to make a firm more attentive to either of the logics. We contribute to the logics perspective by complementing our understanding of organizational filters, showing the relationships between two distinct logics and cleantech investment, and extending the study of logics to authoritarian contexts.