Private Equity Zombie Funds : performance and fund characteristics : An empirical analysis of the global private equity market

Abstract

This thesis investigates performance and other characteristics of zombie funds in the global private equity market using a dataset from Preqin. Our sample comprises a total of 4 204 private equity funds with vintage years from 2003 to 2008. We find that zombie funds constitute a substantial part of the global private equity market as we identify 1 274 zombie funds in our sample. Using IRR and TVPI to measure performance, we find that zombie funds underperform other private equity funds. Furthermore, by looking at DPI, we find that zombie funds distribute less capital back to investors than non-zombie funds. This thesis is based on interim performance measures. We moreover examine whether different fund characteristics display significant relationships to zombie funds. We find that zombie funds tend to be small and report performance data less frequently compared to other private equity funds.