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Professors from four leading business schools have established the Private Equity Research Consortium (Perc), dedicated to improving information about this opaque sector of finance.
Tim Jenkinson, professor of finance at the University of Oxford’s Saïd Business School, joins forces with US-based colleagues from Chicago Booth, Virginia Darden and the University of North Carolina’s Kenan-Flagler school, where Perc will be housed.
Prof Jenkinson’s research has found that private equity returns have historically outperformed public market returns by an average 3 to 4 per cent each year. “The industry and its investors would be better served by agreed benchmarks of performance,” argues Prof Jenkinson.
At UNC, Gregory Brown, professor of finance, says the time is right to launch the consortium. “Over the last two decades, private equity has grown to become an important part of the investment landscape, yet little is known about the industry.”
Financial data on the performance of private equity firms, aggregated from the firms themselves, will be supplied by the Burgiss Group, the software and information provider. Given that private equity firms, unlike public companies, do not publish their accounts, obtaining reliable and comparable data for analysis is challenging, notes Prof Jenkinson.
This data will feed into research by consortium scholars into the sector’s performance, and will also be made available to academic researchers in the field. Perc will be funded by a grant from the UAI Foundation, a North Carolina-based non-profit that supports research in finance.
Prof Jenkinson sees private equity as a permanent and growing feature in finance, and, accordingly, in business schools’ curricula. He notes that venture capital and private equity courses have been among the most popular MBA electives at the Saïd school. “People want to understand how these funds work and what they are about.”