| Foreword | 6 |
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| Acknowledgements | 7 |
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| Table of Contents | 9 |
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| List of Figures | 12 |
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| List of Tables | 13 |
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| List of Abbreviations | 15 |
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| Chapter 1 Introduction | 16 |
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| 1.1 Portfolio strategies of private equity .rms | 16 |
| 1.2 Objective of thesis | 18 |
| 1.3 Basics of private equity .nancing | 19 |
| 1.4 Structure of thesis | 21 |
| Chapter 2 Related literature and previous research | 22 |
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| 2.1 Introduction | 22 |
| 2.2 Return and risk of private equity investing | 23 |
| 2.3 Portfolio strategies and optimal structure of private equity funds | 28 |
| 2.4 Summary: research gaps and contribution of thesis | 30 |
| Chapter 3 Optimal level of diversi.cation in private equity funds | 32 |
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| 3.1 Introduction | 32 |
| 3.2 Modern portfolio theory | 33 |
| 3.3 Optimal number of investment clusters | 35 |
| 3.4 Summary: implications for empirical analysis | 46 |
| Chapter 4 Construction of data set and variables | 47 |
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| 4.1 Introduction | 47 |
| 4.2 Data sets used by other authors | 48 |
| 4.3 Description of data set used in this thesis | 50 |
| 4.4 Description of variables | 57 |
| 4.5 Summary: advantage and drawback of data set | 68 |
| Chapter 5 Choice of portfolio strategies by private equity . rms | 70 |
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| 5.1 Introduction | 70 |
| 5.2 Data and key variables | 71 |
| 5.3 ‘Naive’ diversi.cation across portfolio companies | 75 |
| 5.4 ‘Systematic’ diversi.cation across .nancing stages, industries, and countries | 82 |
| 5.5 ‘Dynamic’ diversi.cation across time | 98 |
| 5.6 Summary: importance of market conditions and . rm characteristics | 104 |
| Chapter 6 Performance of private equity funds: does diversi . cation matter? | 108 |
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| 6.1 Introduction | 108 |
| 6.2 Impact of diversi.cation on private equity funds’ performance | 109 |
| 6.3 Descriptive analysis | 112 |
| 6.4 Multivariate analysis | 120 |
| 6.5 Summary: two basic strategies to increase rate of return | 143 |
| Chapter 7 Summary | 147 |
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| Bibliography | 151 |
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| Appendix A Appendix chapter 3 | 157 |
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| A.1 Expected rate of return and risk of an investment cluster | 157 |
| A.2 Risk of a fund | 158 |
| A.3 Optimal number of investment clusters | 159 |
| A.4 Comparative statics | 160 |
| Appendix B Appendix chapter 4 | 162 |
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| Appendix C Appendix chapter 5 | 164 |
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| Appendix D Appendix chapter 6 | 171 |
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