Investing in Private Equity by Will Kinlaw, Roberto Marsella

Investing in Private Equity by Will Kinlaw, Roberto Marsella

Executive Summary
Sovereign Wealth Funds that invest in private equity face a wide array of questions and 
challenges as they establish best practices. Among these, SWFs should consider:
• due diligence, 
• control, 
• diversification, 
• performance, 
• benchmarking, 
• fee structure and 
• other costs of running a private equity investment program. 
In many cases, SWFs may also benefit from looking beyond the internal rate of return (IRR) 
to design strategies that ensure an enduring and welcoming reception from recipient 
countries. This case study explores best practices for SWFs who invest in private equity.

Objectives
• Review the history of SWF investment in private equity, the current landscape, and trends 
in the nature and structure of these investments. 
• Evaluate the SWF track record with private equity and identify the specific capabilities 
that SWFs must develop to be successful.
• Discuss the need for SWFs to maintain a sustainable presence in key investment 
markets and to develop a comprehensive definition of successful private equity 
investment. Discuss the benefits and risks of going beyond an IRR-only based model of 
success and its implications. Identify specific practices (e.g., communication) to maximize 
sustainability.
• Discuss the due diligence process with a particular focus on the unique implications for 
SWFs.
• Discuss the private equity fee structure and the total cost of a private equity investment 
program (including internal staffing, consultants, etc.)
• Draw conclusions that apply to the broadest possible set of SWFs, while recognizing that 
all SWFs have unique objectives, circumstances, and constraints, and that no single 
solution will apply for all SWFs.

Investing in Private Equity by Will Kinlaw, Roberto Marsella