Co-Investments of Sovereign Wealth Funds in Private Equity

Co-Investments of Sovereign Wealth Funds in Private Equity

Joseph McCahery, F. Alexander de Roode

Series number :

Serial Number: 
334/2016

Date posted :

December 01 2016

Last revised :

December 15 2016
SSRN Share

Keywords

  • sovereign wealth funds • 
  • private equity • 
  • Venture capital deals • 
  • financial markets • 
  • direct investments

Direct investments are the preferred vehicle for large institutional investors to have control over their portfolio investments. We study the deal structure of direct investments by sovereign wealth funds (SWFs) in private equity transactions. We find that SWFs shift from investing in private equity funds to originating and co-investing together with private equity funds in deals.

The choice for co-investment affects deal size, risk-bearing, fees and returns. Overall, our results show the strong interest of SWFs in direct investments in developed markets.

Authors

Real name: 
F. Alexander de Roode
Research Member
Tilburg University Faculty of Law and Tilburg Law and Economics Center