GPEI leverages INSEAD's existing global PE activities to serve specific industry needs through research and educational programmes. We offer the private equity community an opportunity to collaborate with a leading academic institution to develop relevant and targeted studies on private equity. Pre-defined with our partners, the output takes different forms: white papers, case studies, or articles and thought pieces.
In this phase of research series the geographical focus is on Latin America where INSEAD surveyed 131 family firms and interviewed select PE experts to understand the dynamics of the region. This report examines how institutionalization can help a family business secure its long-term survival and unlock growth. It includes an analysis of the survey results and individual case studies that can help family firms understand their own strengths and weaknesses and learn from their peers. It also explores partnership opportunities between family firms and PE investors and uncovers areas of best practice that support sustainable value creation.
This report explains the various metrics employed by General Partners ( GPs) and Limited Partners ( LPs) to arrive at a meaningful assessment of a funds success. Performance in private equity investing is traditionally measured via the internal rate of return (IRR) and multiple of money (MoM) which captures return on invested capital. Once all investments have been exited and the capital returned to limited partners, the final return determines the fund’s standing amongst its peers. However, IRR and MoM, merely provide a first layer of insight into private equity fund performance. Other metrics offer a more nuanced view of performance over the life of the fund, and by various adjustments offer a return picture that is more comparable to the performance of public equity markets and other liquid asset classes.
China’s venture capital (VC) sector has moved into the fast lane. For the first time, Chinese start-ups have attracted more funding than their US counterparts. Is China on its way to becoming the world’s largest VC market? Can its growth rate be sustained? What challenges lie ahead – and what will it take for China to move into pole position in the race for global venture capital?
This report explores the level of institutionalisation at family firms in Asia-Pacific and the Middle East, featuring survey output and insight from interviews with 123 family firms and 14 experienced private equity firms. While an entrepreneurial spirit and close relationships are key elements at the start of a family's business journey, introducing formal policies and procedures to institutionalise the firm's mission and values is critical to preserve competitive advantage and enable sustainable growth over the generations. The report also highlights settings in which family firms and PE investors can partner to unlock value.
This report focuses on the question of value creation in private equity and presents a framework that identifies the sources of return and operational value creation in PE investment. The framework - IVC 2.0 - deconstructs value creation across various financial and operational drivers and isolates value created through capital structure re-engineering, industry operating performance, and company-specific Alpha.
Alexandra Albers Schoenberg and Claudia Zeisberger
This article highlights the practical issues and implications of a limited partner in a private equity fund, suggests factors to consider for investor when setting up a PE fund, focuses on the behavioural elements of being a limited partner, discusses the balance of GP & LP relationship.
Kamal Hassan and Claudia Zeisberger
Rated as top 3 in class, this project analyses important drivers and aspects in Tech Logistics Eco-system in SEA - warehousing and fulfillment centres, transportation, last-mile, and cross-border logistics and also discusses the trends, market overview , challenges, growth/investment investment oppurtunities.
The primary purpose of this paper is to explore innovative solutions in finance, primarily in sub-Saharan Africa, through conversations with founders of businesses and practitioners. The paper draws on conversations between the author and different stakeholders (including entrepreneurs, consultants and academics) during his time at INSEAD and his travels to the region, and concludes with an appendix containing management summaries written on different innovations in finance that have broadly had or seek to have significant developmental impact on the continent.
Value Creation – As Seen from Asia and Ride-Sharing
The purpose of this study is to understand Value Creation from the perspectives of selected technology sectors and Asia. The study takes a global view first, before zooming in to Asia, followed by exploring the value creation definition and understanding how this could play out within venture-backed growth companies in transportation (ride-sharing) through Uber and Grab. The study concludes with some reflections on value creation based on these cases.
Private equity firm Clayton, Dubilier & Rice (CD&R) is preparing a bid for leading US car rental agency Hertz. By replacing Hertz’s top managers, improving capital management and driving down operating costs, CD&R sees an opportunity to nearly double EBITDA. However, the turnaround involves significant risks, which CD&R must weigh in preparing its bidding strategy. Students are required to assess and value the business, evaluate a post-acquisition operating turnaround plan requiring new leadership, select a financial structure to mitigate significant cyclicality, and craft a winning bidding strategy in the context of a competitive auction.
In 2010, ACTIS embarked on an ambitious project to build a pan-Middle East and Africa (MEA) payments platform. It had purchased Mediterranean Smart Cards Company (MSCC), a bankcard issuer with operations across Africa, and had identified a follow-on target, Visa Jordan Card Services as part of its buy-and-build strategy, and another potential acquisition in South Africa. These could enable the ACTIS platform to capture the entire value chain in the payments business in the MEA region. However, not long after the purchase of MSCC, political turmoil engulfed the Arab world, prompting the ACTIS investment committee in London to question the viability of creating a payments platform in MEA.
Careem, a Dubai-based ride-hailing company, was founded in 2012 in the United Arab Emirates (UAE) by two ex-McKinsey consultants who saw a gap in the transport market. Started as a web-based car booking service for corporate clients, Careem had evolved into a leading application-based booking service in the Middle East and North Africa (MENA) region, with a differentiated business model tailored to the tastes and preferences of Middle Eastern consumers. Fuelled by venture capital funding rounds in September 2013 and December 2014, Careem was again on the fundraising trail in 2015 for a Series C investment round to further scale its existing business and continue its roll-out across MENA. The Abraaj Group, a leading emerging markets private equity investor, was interested, but with Uber competing fiercely in the MENA region, it had to decide whether Careem could compete with its well-funded global competitor.
In May 2012, private equity firm KKR is considering the buyout of WMF group (WMF), a diversified kitchenware and professional coffee machine manufacturer headquartered in Geislingen, Germany. The deal seems a potentially compelling investment opportunity, with various options for value creation – expanding WMF's well-established brand to other geographies as well as reducing costs. Priorities must be set, however, to generate an attractive return by the end of the investment period. The deal team has to decide which business segments are worth putting more resources into and which to divest, which brands should be kept and which to trim off, and how to take up any operational slack without affecting the overall strategy.
In 2011, Partners Group is nearing the end of a year-long quest for a new mandate from a European pension fund, Future Plan. The fund has struggled with its 6-year old PE programme, consistently falling short of its target allocation to the asset class and generating poor returns, seemingly always one step behind the opportunity in the market. Future Plan has built its PE programme by investing in closed-end funds of PE products managed by two executives, one focused on European markets, the other on global markets. But the fallout from the global economic crisis wreaked havoc with Future Plan's PE programme and something has to change. With an interest in expanding its PE activity to include secondary and direct investment strategies, Future Plan begins a manager search process with one goal in mind: to achieve the target return to the asset class by 2014.
The eleventh edition of INSEAD’s Private Equity Navigator focuses exclusively on the recent publications and articles from the Global Private Equity Initiative (GPEI) and its stakeholders.
The ninth edition of the INSEAD-Pevara Private Equity Navigator presents a geography-by-geography comparison of PE and public equity performance to test the commonly-held belief that PE consistently outperforms its public market peers, expanding on research first presented six months ago.
We welcome your thoughts and suggestions on our research and outreach activities.