Private Placements : Understanding the Performance

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The appetite for private placements, mainly private equity and venture capital, is persistent in Western Europe. In a recent Preqin report, private equity funds in Europe raised respectively $121bn and $108bn in 2016 and 2017.

These are fundraising numbers that were not reached in a decade. Moreover, in Belgium, around 200 new investments in privately held companies are made each year.

  • What are the reasons behind this interest?

  • Do private placements actually give higher returns than public markets?

  • Why is the PME gaining popularity?

These are some of the questions that will be addressed in this article whose purpose is then to explain the PME (Public Market Equivalent) and present the available tools and solutions to make as precise comparison (risk-adjusted) between private placements and public markets returns. 

Summary

  1. The importance of Private Placements

  2. What is the Public Market Equivalent concept ?

  3. What are the limits of the PME concept ?

  4. How to access the limits ?

  5. What are the tools ?

  6. Conclusion

  7. Reference

The Author

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Vincent Tremblay grew up in Montreal, Canada before moving permanently to Belgium and joining Initio as a Junior Consultant on October 2017. 

Vincent obtained a Master’s degree in Business Administration with a specialization in finance from the HEC Montreal school and alreay gained experience in financial analysis, data mining, process automation, financial modeling and private placements.