Princeton University Users: If you would like to view a senior thesis while you are away from campus, you will need to connect to the campus network remotely via the Global Protect virtual private network (VPN). If you are not part of the University requesting a copy of a thesis, please note, all requests are processed manually by staff and will require additional time to process.
 

Publication:

A Performance Assessment of Private Equity and Venture Capital in the Energy Transition

Loading...
Thumbnail Image

Files

A_Performance_Assessment_of_Private_Equity_and_Venture_Capital_in_the_Energy_Transition.pdf (1.18 MB)

Date

2025-04-10

Journal Title

Journal ISSN

Volume Title

Publisher

Research Projects

Organizational Units

Journal Issue

Abstract

The energy transition is one of the most pressing issues facing contemporary society, and financing the path to de-carbonization involves a great deal of private financing from institutional investors. While infrastructure funds often garner the most attention among these private closed-end investment vehicles, past research has documented their underper- formance relative to other alternative asset classes. This work, therefore, examines other private closed-end investment vehicles (private equity and venture capital) with exposure to energy transition assets and provides a comprehensive performance assessment of these funds relative to traditional energy private closed-end funds. Panel data from Prequin is utilized to assess various return metrics, return volatility, covariance of returns with mar- ket and energy/utilities indices, and cash flow distribution profile through various regres- sion models. Results show no overall performance differences in returns and volatility for renewable-exposed funds and mixed-mandate funds. Results do find, however, that North American and venture capital funds underperform significantly when no development incen- tives are in place. Furthermore, renewable-exposed funds exhibit lower market and energy index correlation and have shorter duration in North America and Europe, demonstrating attractive hedging and liquidity features of these funds relative to their traditional energy peers. This analysis also reflects on the role of development incentives in driving energy transition investment performance.

Description

Keywords

Citation