Factors Driving Abnormal Returns in Private Equity Industry: A New Perspective

Abstract

This article investigates factors driving abnormal returns in private equity funds in India from 2007 to 2012. We find that skill factors such as type of exit route, holding period, size of investment, stage of investment, and type of industry significantly affect abnormal returns of private equity funds. In addition, market factors such as investment year, entry and exit value of S&P CNX Nifty, and market return during the period of the deal as well as a fund’s structure also drive abnormal returns in private equity funds. Finally, stage of investment and the types of industry, sponsor, and exit style, as well as holding period and type of exit route jointly influence abnormal returns in private equity funds.

TOPICS: Private equity, emerging, performance measurement, statistical methods