The disintermediation of financial markets: Direct investing in private equity

Lily Fang, Victoria Ivashina and Josh Lerner

Journal of Financial Economics, 2015, vol. 116, issue 1, 160-178

Abstract: We examine 20 years of direct private equity investments by seven large institutions. These direct investments perform better than public market indices, especially buyout investments and those made in the 1990s. Outperformance by the direct investments, however, relative to the corresponding private equity fund benchmarks is limited and concentrated among buyout transactions. Co-investments underperform the corresponding funds with which they co-invest, due to an apparent adverse selection of transactions available to these investors, while solo transactions outperform fund benchmarks. Investors’ ability to resolve information problems appears to be an important driver of solo deal outcomes.

Keywords: Financial intermediation; Private equity; Direct investment; Co-investment (search for similar items in EconPapers)
JEL-codes: G23 G24 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (27)

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Related works:
Working Paper: The Disintermediation of Financial Markets: Direct Investing in Private Equity (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:116:y:2015:i:1:p:160-178

DOI: 10.1016/j.jfineco.2014.12.002

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