All Else Equal: Making Better Decisions Ep63 “What Explains the Growth of Private Equity? A Different Perspective” with Ludovic Phalippou
12 snips
Aug 13, 2025 Ludovic Phalippou, a Professor of Financial Economics at Oxford and author of 'Private Equity Laid Bare', delves into the rise of private equity and its allure for investors. He discusses the complexities of monitoring investments in private markets and the vital role of oversight. The conversation examines the tricky nature of measuring performance between private and public markets, as well as the influence of mega asset owners since the 2000s. Phalippou also highlights the importance of choosing appropriate benchmarks for assessing private equity returns.
AI Snips
Chapters
Books
Transcript
Episode notes
Private Ownership Trades Monitoring For Risk
- Private ownership trades off risk concentration for stronger monitoring and better firm stewardship.
- Private equity can reconcile concentrated incentives with investor diversification via intermediaries.
Private Markets Fit Large Long-Term Investors
- Endowments and pensions don't value millisecond liquidity, so private markets naturally suit their needs.
- Private markets also supply concentrated monitoring and aligned incentives for turnarounds and long-term holds.
Mega Asset Owners Shift The Trade-Off
- The rise of 'mega asset owners' means large institutions can directly hold many companies and reduce the need for public markets.
- This creates a third governance route beyond the textbook trade-off of diversification vs monitoring.
