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 our second edition of the Exit Landscape report, we discuss the impact of the pandemic on the exit landscape forecast and the rise of SPACs in Southeast Asia.
GPEI has expanded on our first ESG report published in 2014 to include in-depth conversations with LPs and GPs in INSEAD’s network, to gain both perspectives on the changing nature of ESG in private equity. On the LP side, we examined the requirements and ‘asks’ of the LP community, while on the GP side, we identified key characteristics of best-in-class ESG approaches.
In Phase 3 of our research series to understand how institutionalisation can help a family firm achieve sustainable growth, the geographical focus shifts to Europe where family firms represent 70-80% of all business enterprises and account for 40-50% of employment. We surveyed 121 family businesses and interviewed 7 leading PE firms to examine the level of institutionalisation of family firms in Europe. The report includes individual case studies that can help family firms understand their own strengths and weaknesses and learn from their peers, as well as explores partnership opportunities between family firms and PE investors.
Southeast Asia (SEA) has a young and vibrant technology startup ecosystem. An ecosystem that is maturing at a rapid pace with capital increasingly allocated to up and coming tech startups. With the rise of unicorns, foreign venture capital and corporates, Golden Gate Ventures in partnership with INSEAD felt it was time to revisit earlier research relating to the exit landscape. In the analysis we're taking a deeper look at the historical exits (strategic acquisitions, IPOs and trade sales) and make a forecast of potential exits for the next 6 years.
Family owned and controlled firms form the backbone of Latin American economies, accounting for 75% of all $1 billion-plus businesses in the region and 60 percent of its aggregate GNP. It follows that family businesses must create value and thrive for the economic well-being of their home countries. So how can family firms ensure long-term value creation? In Phase 2 of our research series on the institutionalisation of family firms, we surveyed 131 family firms and interviewed select PE experts to understand the dynamics of how institutionalisation can help family-backed enterprises in LATAM secure its long-term survival and unlock growth.
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.
CVCs offer funding, access to resources such as experienced business unit leaders, marketing and development support, and the halo-effect of an established brand. But interested startups should be aware of the potential drawbacks. This paper represents the findings of an in-depth survey of the CVC landscape, explains the types of CVCs and their objectives and provides a step by step guide to determine whether a specific CVC matches the start-ups' needs.
In the first half of 2021 alone, Corporate Venture Capital funds (CVCs) around the world inked more than 2,000 deals worth more than $70 billion. It’s an increasingly prevalent alternative to traditional funding options such as VCs and angel investors — but how can entrepreneurs determine whether a CVC is the right fit for their startup? In this paper the authors discuss the results of a series of quantitative analyses and qualitative interviews exploring the CVC landscape, identifying four common types of CVCs and three recommendations for founders considering a CVC investment.
The use of private capital in investor portfolios has grown tremendously over the last 20 years, aided by the public success of U.S. endowments like Yale and Harvard, who were early adopters of venture capital and private equity. In this paper, the aspects of private capital’s history, its long-term growth prospects, and why an increasing number and range of investors are utilising the private markets globally are reviewed.
The overall private capital industry has grown significantly over the last 20 years. Assets under management (AUM) have grown more than tenfold, from US$647 billion in 2000 to $4.8 trillion in 2019. This growth is driven to some extent by the strong performance of some primary PE funds.
Is venture capital a risky asset class? Most VC funds choose to act in a risky manner by not diversifying, but that does not make the asset class risky. To de-risk venture capital, CIOs simply need to acknowledge that VC math is different from public markets math. The importance of low-probability, excess-return-generating investments means that proper diversification requires a portfolio of at least 500 start-ups.
Avi Turetsky, Matthew Pyrz, Barry Griffiths, Joaquin Lujan and Isaac Beckel
The gains from private market investing are best understood relative to public benchmarks. But there has been no way to compare the two in currency terms – until now. "Excess Value" method enables investors to measure the performance of their private market portfolios relative to a public benchmark in currency terms.
Daniel Gospodinov and Claudia Zeisberger
Globally, climate change has dominated the public space in the past couple of years. This has propped up a strong investor demand. To wit, 84 percent of millennials invest with a focus on environmental, social and governance (ESG) impact as their central goal as compared to less than 50 percent for baby boomers. Given that an estimated US$68 trillion will be passed down from baby boomers over the next 30 years, with up to 80 percent of investment goals being reconsidered in the process, a significant flow of investment towards impact – specifically, climate change – is expected. Similarly, the supply side has also seen growth, although still mainly in ‘pockets’ and with limited regulation around it. There has been an emergence of green bonds, green-project finance and ESG-agnostic investments in public assets. Large PE/VC funds have also come to the forefront.
Monisha Varadan, Kamal Hassan and Claudia Zeisberger
Alexandra von Stauffenberg
How the VC Pitch Process Is Failing Female Entrepreneurs
Kamal Hassan, Monisha Varadan, Claudia Zeisberger
Y Combinator Accelerates the Hunt for Unicorns
Y Combinator will open a 10-week, free-of-charge massive open online course (MOOC), supplemented with virtual office hours and access to 15,000 founders worldwide as it's part of their goal to maximise the amount of entrepreneurship and innovation in the world
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
Sam Garg and Nathan Furr
This project entails a review and analysis of the private equity landscape for Impact Managers, including but not limited to; market mapping of impact managers, shaping narrative on impact investing themes and recommendation from the INSEAD team.
The market has many different ideas as to what 1. Venture building means and 2. How to create ways to orient different goal within Venture Building. Hence, the first chapter of this study aims to better understand the market as well as find ways to better communicate the venture building ideas with the clients. The objective of the second chapter is to complete the analysis of Corporate Venture Building started with “Corporate Innovation through Venture building” through an inside-out perspective on Corporate Venture Building.
The main objective of this study is to understand how CVCs contribute to corporate strategy and how they affect deals and exits. The study also provides key learnings for corporations to setup successful CVCs.
This project aims to describe the best practices globally by VC firms that KK fund - a Singapore based VC firm, looking to adopt innovative practices to scale presence in SEA - can model after by conducting in-depth analysis on VC successes and best practices through desk research and interviews with VCs and VC-backed firms.
This project aims to develop a perspective on the trends affecting company board governance (the “Future of Boards”). Specifically, how trends such as diversity, remote work, ESG, amongst other items, are affecting and shaping boards, with a focus on differences between public and private boards have been analysed through a series of interviews with board directors. Based on these analyses the project also seek to identify what the Board of the Future should look like in terms of operating model, use of technology, and impact of ESG on its function.
Based on 40+ interviews with VCs and Angle Investors the “Defensible Startup” report aims to offer a defensibility (moats) framework and set of examples of how different companies got started on their journey towards architecting and constructing their moats – i.e. to try to make a connection between early actions taken by founders and eventual moat outcomes.
Food sector continues to look like an attractive segment to be focused on, given strong fundamentals. There is a significant opportunity for biotechnology players in this segment, whether focused on improving current system (e.g. crop yield optimisation) or pushing new innovations (e.g. precision fermentation, cultivation). Funding in biotech x food space is growing quickly, increasing to €1b+ range within a matter of 5-10 years. This project aims to frame the intersection between biotechnology & food, map the relevant start-ups in this space, review the active funds and provides high-level recommendations for new investment entities.
LEGO Ventures is looking to invest in Digital Play which consists of video games, social play experiences, and support services in Asia. This project provides a summary of potential investment candidates sourced by the project team and validated by LEGO Ventures. In addition, each candidate contains a deeper and candidate-specific qualitative analysis based on questions proposed by LEGO Ventures.
The HealthTech sector in SEA saw record breaking funding levels in 2019 as deal volume rose at a 63 CAGR. 2 of the 5 largest SEA HealthTech deals in 2019 are based in Indonesia Halodoc and Alodokter while the others are based in Singapore. This project assesses the SEA HealthTech landscape from a VC lens by providing macro review of the healthcare and eHealth space and trends in addition to an overview of numerous startups and VCs currently active in the region.
This case describes how PT Rekan Usaha Mikro Anda (“PT RUMA,” “RUMA,” or known by its trading name “Mapan”), a social enterprise in Indonesia, leveraged the support from Impact VCs and grew from a small tech start-up to a pan-Indonesia presence that was eventually taken over by Gojek. Apart from making a significant social impact by lifting millions of poor Indonesian families out of poverty, the deal represents one of the earliest successful impact VC investments and one of the largest impact VC deals to date in Southeast Asia. It continues to encourage and attract more impact VC capital to flow into this part of the world.
In June 2016, Singapore’s state-owned investment firms GIC and Temasek Holdings purchased a combined US$1B of stock in Alibaba Group Holding from Japan’s Softbank Group, the largest investor in Alibaba at that time. This case examines the context of the sale and the motivations of the investment firms.
This paper attempts to provide a balanced, evidence-based answers to four questions regarding private equity allocations: (1) Does private equity provide higher returns, lower volatility, and diversification benefits for institutional investors? (2) Can private equity returns be replicated with a public market strategy? (3) Do private equity lockups enhance returns or increase risk? (4) What are the implications for LP allocations to private equity?
Investors ranging from sovereign wealth funds and venture capitalists have ploughed increasing amount of funds into alternative protein companies. Funding in 2020 is on pace to outstrip previous years, with the amount of money raised in the first quarter of the year already dwarfing all of 2019. This study dives deeper into the trends, players and opportunities in Asia’s alternative proteins space. Specifically, the report zeros in on the 5 broad sectors in alternative proteins – Cultivated Meat, Fermentation, Insect Protein, Whey Protein and Plant-Based Protein.
The main purpose of this report is to outline how non-financial factors such as ESG considerations can be incorporated by General Partners (GPs) to drive their risk-adjusted returns. The report also provides a perspective on how GPs should act in the short-term to avoid pitfalls and leverage opportunities connected with the ongoing COVID-19 crisis.
This project provides a macro overview of family offices as well as key global trends within the industry and offers key learnings from selected best in class family offices.
Chinese companies are widely regarded as pushing the technological and innovation frontier as well as successfully introducing and scaling new business models . In many regions across the world and, in particular, South East Asia (SEA), similar technologies and business models seem to be adapted. There appears to be a time lag between the successful adoption in China and elsewhere , as, for example, significant time lags between China and South East Asia in the founding dates of successful startups can be observed. In order to obtain a comprehensive and unbiased perspective on this phenomenon , this project analyses past investments across industries in China and SEA.
This project examines private equity opportunities in promising industries in Indonesia, Vietnam and Thailand. The following three markets are analyzsed in detail: Fintech opportunities in Indonesia, Consumer Retail in Vietnam and Food Manufacturing in Thailand.
Climate change is a worldwide risk that generally impacts emerging countries more than developed countries. Climate risks can have a material impact on both the real economy and the financial system. The overall finance industry is moving towards ESG and institutional investors towards “green” impact investing. This study represents INSEAD team’s own independent recommendations to CDC and its Financial Institutions (FI) team and is expected to inform CDC’s own strategy which is being developed independently.
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 opportunities.
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.
This case describes the ESG journey of Pro-invest Group, an asset management and investment firm specialising in private equity real estate across the globe.
This experiential case simulates an investment committee meeting at the private equity firm Bridgepoint, a leading European mid-market private equity firm. In the first quarter of 2011, with Europe in a recession following the global financial crisis, forecasters are predicting the start of an economic recovery.
WeWork has seen a decade of growth with a disruptive new service business model in a rapidly transforming industry: shared office space for start-ups (and increasingly for big companies) thanks to its understanding of workplace trends. The case allows discussion of customer-centricity in a B2B service context, and of how companies optimize – digitalize – the customer experiences by leveraging data.
The Sula case series focuses on the risks and rewards of early-stage investing in a successful emerging market consumer start-up (i.e. non-tech), from seed funding in 2004 to raising expansion capital in 2019. Case C discusses Sula at a later stage where the founder faces the decision of either keeping the company private or taking it public, and the potential impact on governance in transferring a majority stake to a single investor.
The Sula case series focuses on the risks and rewards of early-stage investing in a successful emerging market consumer start-up (i.e. non-tech), from seed funding in 2004 to raising expansion capital in 2019. Case B discusses Sula at growth stage where we look at how the company raise a subsequent round of funding to scale up and its associated market and implementation risks. It also examines the entrepreneur’s choice of subsequent partners after the exit of seed investors. .
Can 3G Capital Make Burger King Cool Again?
When 3G Capital bought Burger King from TPG, Bain Capital and Goldman in 2010, the fastfood chain was losing momentum. By 2014, the business was back in growth mode but the Burger King brand was still lacking lustre and it was unclear if the celebrity-heavy ad campaign would work. Could new CEO Daniel Schwartz and his team make the brand cool again – on the cheap? Drawing on data from a brand audit, the challenge is to (i) define the brand’s identity and choose among five positioning ideas; (ii) allocate expenses between television, digital and PR, and brand and restaurant redesign. For the digital and PR components, for example, students have to evaluate eight mock-ups created by Burger King’s agency, and come up with their own ideas for Burger King to evaluate.
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.
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