Private Equity Indices - Coursework Example

Corey, C.W. (2008) states that Africa, like China and India before it, is gradually losing its reputation as a “frontier market” and is becoming a destination for private equity, a top investment banker told the seventh annual African Growth and Opportunity Act (AGOA) Forum July 15. Tom Gibian, chief executive officer of Emerging Capital Partners (ECP), drew parallels between current economic performance across the continent and conditions seen in both China and India as both economies began to take off.

  Private equity has been ingrained in the strategy of the asset allocation of institutional investors for a very long time. However, engaging the investors in general in this type of financing has been proved to be difficult due to high investment even at the minimum level, liquidity concerns and the long term nature of the investment.The Dow Jones Private Equity Index was launched on 9 October 2006 and it was a beginning of a new era in private equity. There are 25 components involved in the Index and Dow Jones is responsible for the calculations and the maintenance of the index which is reviewed on a regular basis as in the case of other Dow Jones Indices.

The quarterly review is undertaken with the cut-off on the 3rd Friday of March, June, September, and December, and the changes are effective from the next trading session. There are four types: (1) Private Equity Total Return Index in EUR (PRIVEX) (2) Private Equity Index Price Index in EUR (PRIVEXP) (3) Private Equity Total Return Index in USD (PRIVEXD) and (4) Private Equity Index Price Index in USD (PRIVEXPD). In collaboration with Dow Jones, Société Générale has developed the Private Equity Index (PRIVEX) for the global private equity sector with 25 largest and most liquid listed private equity companies covering all the regions globally where the private equity companies are active.

(Annexure - I) The basic selection criteria for the index components to be included in the index are market capitalization (200 million USD) and liquidity.