We improve public understanding of the role of private capital in the global economy. Academic and industry experts work together to generate new knowledge about private capital markets based on objective academic research.
Please join us for our upcoming research symposium November 22, 2019 in Beijing, hosted by the Tsinghua PBC School of Finance and the Institute for Private Capital (IPC).
We hope you will join us on May 28-29, 2020 at the Spring PERC Symposium held at the University of Oxford, Saïd Business School. Similar in structure and style to the longstanding PERC Symposium held in the fall in Chapel Hill, NC.
Please join us November 14-15, 2019 for the upcoming 11th annual Private Equity Research Consortium hosted by the Institute for Private Capital at the Rizzo Center in Chapel Hill, NC.
This conference serves as a forum for investment managers, institutional investors and academics to network, share ideas and stay abreast of the latest industry trends. REGISTRATION COMING SOON

Latest Research

Why Defined Contribution Plans Need Private Investments

October 16, 2019

We examine the impact of including private investment funds into diversified (e.g., balanced and target date fund) portfolios that otherwise hold only public stocks and bonds. Our analysis utilizes a comprehensive sample of 2,515 U.S. private equity funds to create simulated portfolios for 1987-2017 that invest part of their overall equity allocation in these funds. We find that investing in private funds always increases average portfolio returns and reliably increases Sharpe ratios (return per unit of risk). More

Private Company Valuations by Mutual Funds

October 08, 2019

Mutual funds that hold private securities value these securities at considerably different prices. Prices vary across fund families, are updated every 2.5 quarters on average and are revised dramatically at follow-on funding events. The infrequent, but dramatic price changes yield predictable fund returns, though we find little evidence of fund investors exploiting this opportunity by buying (selling) before (after) the follow-on funding events. Consistent with fund families opportunistically marking up private securities, we find that funds near the top of league tables increase private valuations more around year-end follow-on funding events than funds ranked lower. More

Valuing Private Equity Investments Strip by Strip

August 22, 2019

We propose a new valuation method for private equity investments. First, we construct a cash-flow replicating portfolio for the private investment, using cash-flows on various listed equity and fixed income instruments. The second step values the replicating portfolio using a flexible asset pricing model that accurately prices the systematic risk in listed equity and fixed income instruments of different horizons. The method delivers a measure of the risk-adjusted profit earned on a PE investment, a time series for the expected return on PE fund categories, and a time series for the residual net asset value in a fund. We apply the method to real estate, infrastructure, buyout, and venture capital funds, and find modestly positive average risk-adjusted profits with substantial cross-sectional variation, and declining expected returns in the later part of the sample. More

Recent News & Media

Taming Unicorns: The Chaotic World of Mutual Fund Valuation

November 20, 2019

Over the last two decades, public and private equity markets have changed dramatically. For instance, the total number of publicly listed firms decreased from more than 7500 in 1997 to approximately 3500 in 2018. This precipitous decline can be attributed to a corresponding sharp drop in the number of IPOs. More