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Combining Banking with Private Equity Investing

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  • Lily Fang
  • Victoria Ivashina
  • Josh Lerner

Abstract

Bank-affiliated private equity groups account for 30% of all private equity investments. Their market share is highest during peaks of the private equity market, when the parent banks arrange more debt financing for in-house transactions yet have the lowest exposure to debt. Using financing terms and ex-post performance, we show that overall banks do not make superior equity investments to those of standalone private equity groups. Instead, they appear to expand their private equity engagement to take advantage of the credit market booms while capturing private benefits from cross-selling of other banking services.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 19300.

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Date of creation: Aug 2013
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Handle: RePEc:nbr:nberwo:19300

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