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Private equity in Italy: performances and investment selection ability

Francesca Querci
April 2009 - n°4

The paper investigates the performances of Italian private equity industry, either at investment or fund level. The analysis considers all the investments which were realized by Italian closed-end funds, from 1999 to 2003.At investment level, the performance is positively correlated with the annual sales growth rate of the participated firms and negatively correlated to the holding period. Besides, the internal rate of return is influenced by the exit strategy used by the private equity fund. At fund level, nearly all funds show a very high concentration of performances on a few investments.This result reflects the peculiar investment selection ability of the fund managers.The higher the performance variability, the greater the investment selection ability.