Knowledge@Wharton Articles

Knowledge@Wharton, the online business journal of the Wharton School of the University of Pennsylvania, offers research, commentary and analysis from Wharton faculty and other experts on a wide range of business, economic and financial subjects. This section includes articles on the private equity (PE) industry and related topics.

Impact Investing’s Next Hurdle: Better Networking

Tess Mateo is a matchmaker. Her job is to interest private investors in projects throughout the world that will improve the quality of life for people and protect the environment. It is not unusual for her to touch down on … Continue reading 

invest-plant-300x200

Private Equity – Holding Steady, Readying a Growth Stage

After a lackluster first half, private equity broke out stronger in the third quarter, fueled largely by corporate America’s shedding of some large, non-core assets. Expect this trend to continue in the months ahead, with most deals in the middle … Continue reading 

dv1959057

Private Equity in India Finds Opportunity in Adversity

Private equity (PE) in India is facing problems because of unclear and changing regulations, and the lack of exit routes. At the same time, many are turning to PE funds because other sources of finance have dried up. This year … Continue reading 

Bain_Cover_large

European and Spanish Private Equity Firms Take Shelter in Latin America

Over the past two decades, Spain has become one of the favorite markets for private equity (PE) firms. For example, global investment firm 3i, based in the U.K., has made Spain its second largest investment platform. Investment funds have focused … Continue reading 

092910_basel_III

Private Equity’s Growing Appetite for India’s Restaurant Industry

The Specialty Restaurants Ltd. initial public offering (IPO) in May this year was a landmark event for more than one reason. It was the first Indian restaurant company to go public. (Jubilant Foodworks, another listed entity, is a franchisee for … Continue reading 

table-for-two-150x150

Africa: A Frontier for Private Equity, but a Pitfall as Well

For Azeem Zainulbhai, finding opportunities in Africa’s frontier markets means thinking outside the box — or, in the case of one recent transaction in Angola, living inside a box. OK, not really a box, but a shipping container — technically, … Continue reading 

Africa

Private Equity Heads Down a New Path

The general approach towards private equity investments has shifted substantially, in part to conform with the tougher market conditions prevailing after the financial shocks of the last few years. Gone are the days of earning profits largely through financial engineering … Continue reading 

sb10064974g-001

SME Private Equity 2.0

Private equity (PE) has gotten more attention recently thanks to the end of easy credit for LBOs, the rise of the Chinese Dragon and the Indian Elephant, LP reallocations and an increasing focus on small and medium enterprises (SMEs). Today, no PE discussion is complete without touching on emerging markets. Within these regions, SMEs have become the flavor of the month given the smaller deal sizes available, a robust pipeline of family-owned businesses and the lack of leverage for large LBOs. Yet, 2011 saw currencies spiraling downward, country deficits climbing and even the likes of India and China lowering their GDP outlook. To help sort it all out, this study looks at Asia, and particularly SMEs, to identify capital deployment trends and the macroeconomics of developing geographies beyond routine macro-indicators such as demographics. It develops a framework for two of the most critical areas involving SME-EM deals: proprietary deal sourcing and operational value-addition.

SME Report

Microfinance: Successes and Challenges

Jean-Philippe de Schrevel is CEO and co-Founder of BlueOrchard Investments, and also founder and CEO of Bamboo Finance and the Oasis Fund. His companies specialize in asset management and microfinance projects that target positive social impact and produce “market” returns … Continue reading 

Jean-Philippe de Schrevel

Private Equity Buys Time with Major Refinancings

In the boom years of 2006 and 2007, European and North American private equity firms acquired significantly larger businesses, financing the deals with record levels of debt. The borrowings often consisted of four- and five-year term loans. When the credit freeze followed the banking crisis in 2008, many predicted a flood of defaults when the “wall of maturity” arrived in 2011 and 2012. Fast-forward to today and it appears as if the industry has sidestepped a crisis. Most PE firms proactively addressed the problem by paying down debt, renegotiating terms, or turning to the high-yield bond market and other sources to refinance, extending debt maturity dates by several years. But that begs a new question: How will the industry fare if economic and sovereign debt problems in Europe and the United States drag on?

Private_Equity_Buys_Time_Refinancing