Distorting Private Equity Performance: The Rise of Fund Debt
James Albertus and Matthew Denes of the Tepper School of Business at Carnegie Mellon University have released a new paper in which they use preliminary Burgiss data to document the increasing use of subscription lines of credit (SLCs) as an additional source of capital. The co-authors believe this is the first academic paper to study subscription lines of credit using actual investor cash flows. In their findings, they also suggest that the use of SLCs increases IRRs by 6.1 percentage points, while investment multiples decline slightly.
Use the link below to download a copy of the paper and review the results.