Private Equity’s Biggest Critic Sounds Off With His Final Warning
University of Oxford’s Ludovic Phalippou contends the high-fee industry doesn’t outperform publicly traded stocks.
When University of Oxford professor Ludovic Phalippou told financiers responsible for investing trillions of dollars in retirement money that the stated returns for private equity funds were nonsense, there were two reactions, he recalls. Some worried they could be legally liable for misunderstanding the data. And some wanted everyone to pretend the talk never happened.
It’s been almost a decade since Harvard arranged that talk over video. Since then, the 44-year-old financial economist has amplified his warnings, becoming a sort of industry Cassandra even as investors plowed more money into funds run by private equity specialists including Blackstone Group Inc. and KKR & Co. Last month, Phalippou fired off one final paper blasting the opacity of private equity fees and performance. He doesn’t plan to write on the subject again.