Introduction

Abstract

The global growth of the private equity industry has been spectacular over the last years. According to Private Equity Intelligence, private equity funds worldwide raised USD 432 billion in 2006 which is an increase of 38% on the already strong 2005 figure of USD 313bn.1 In 1985, global fundraising has been only USD 5bn indicating an annual growth rate of around of 24% of the asset class over the last more than 20 years.2 The private equity universe, i.e. the total private equity assets under management, accounted for around USD 1,400 billion in 2006.3 The growth of the asset class also reflects in the trend for larger fund sizes.4 The ten largest funds in 2006 together raised USD 100bn. Six of them were among the largest private equity funds of all times.5 As these funds use typically high leverage ratios when investing in portfolio companies, their actual economic impact is even greater as these figures suggest.6 As a result, the industry has developed significantly in the past years to the extent that it is not longer regarded as the niche sector it once was. Today, private equity has “moved from the fringe to the centre of the capitalist action”7 and private equity investors are shaping entire industries with their investment strategies.