Professor Florencio Lopez de Silanes Molina will present the paper 'Private Equity Debt Funds: Who Wins, Who Loses?'
Abstract: We exploit a unique data set to provide the first analysis of the structure, performance and gain distribution of deals financed by the same private equity firm on the equity and debt sides (sponsored deals). Most sponsored deals are carried out by a few large and experienced PE firms. In support of the conflict of interest hypothesis, we document a transfer of value from debt to equity funds in sponsored transactions relative to non-sponsored transactions. Yet, the overall value impact of sponsored deals (debt and equity combined) is positive and investors of PE-affiliated debt funds do not loose overall. Sponsored deals end up generating sizable gains for PE firms, most likely through the better ex-post incentives of these structures.