Returns generated by private equity exceed those in the public markets, according to Mark Wiseman, the Canada Pension Plan Investment Board’s senior vice president, private investments.
Although the returns can’t be measured precisely, it’s no wonder institutional investors are moving into the space, he said yesterday at the University of Toronto’s Rotman School of Management.
“A large part of what you’re seeing in terms of the amount of capital going into the industry is simply the fact that institutional investors have begun to understand that there are excess returns…afforded to private equity versus the alternative, which is investing in the public equity markets,” Wiseman said.
As a result, the pace of private equity investing is on the rise, said Tim Dattels, partner, TPG Capital, LP(Texas Pacific Group).
Nine of the 10 largest leveraged buyouts have occurred since 2005. The only one before 2005 was the purchase of RJR Nabisco by Kohlberg Kravis Roberts & Co. in the late 1980s.
The fifth part of our Alternative Investment Guide, The inner workings of private equity, has more about this subject. For that story, click here.