Institutional investors in private equity funds in Europe

Abstract

PURPOSE: The aim of the review study is to analyze and assess the structure of institutional investors in private equity funds in Europe.

DESIGN/APPROACH: The research concerning the structure of institutional investors in private equity funds on European market in 2018- 2022 was conducted on the basis of secondary data from statistical data mainly included in research conducted by Invest Europe.

FINDINGS: The aim of private equity (PE) is to provide a high return to investors on those assets, assigning expert management teams to manage the companies and assets outside of the glare of public markets. PE has grown rapidly over the last three decades. Over the last decades investing in PE and real assets has gained considerable momentum. Achieving high exposure to PE is a challenge faced by institutional investors who in recent years have been building sizable allocations to this alternative investment vehicle. Successfully acquiring, managing, and exiting these investments directly demands strong expertise and incentives that most institutional investors are lacking. The vast majority of private equity funds are organized as limited partnerships responsible for fundraising investment decisions, and development of the portfolio companies.

PRACTICAL IMPLICATIONS: The research conducted on a role of institutional investors in PE activities may provide a rationale for expanding research in this area in another countries and regions and assessing the vulnerability of financing relationships to unexpected external difficulties.

ORIGINALITY/VALUE: Study, in the form of a scientific contribution with a high degree of applicability, takes the form of a review using literature and published statistics and was geared towards analyzing and assessing changes in the investments and numbers of institutional investors in European PE funds market.