Currency Hedging in Private Equity

Any good literature/research on currency hedging in private equity and it’s irrelevance? Any help appreciated.

curious as to why it would be any different from currency hedging in any other field?

Why do you think it is irrelevant? Currency swings can have a huge impact on returns. Not just EM currencies either. The USD appreciated by ~30% against the Euro in less than a year in 2014. The appreciation against Sterling has been even more dramatic. Makes sense for a lot of people to hedge. Hedging comes with a cost of course (most of the time at least - hedging Yen is currently profitable from most base currencies).

Ya mean an impact like this?

http://www.cnbc.com/2015/03/16/everest-capital-falls-off-a-swiss-cliff.html

Are you coming from the perspective of a GP or LP Ramos? In my experience many GPs now hedge at least partially or offer LPs the choice of a hedged share class. Most LPs will do at least some FX hedging in my experience also.

i never said they were irrelevant, just wondering how it would be any different than managing currency exposures for any other business or investment fund?

GP. The hold period is longer. The general conjecture is that the hedging is ineffective and too expensive because of the longer hold and control over when and when not to sell. My experience is most PE GP’s don’t hedge currency risk.

http://www.pionline.com/article/20160516/PRINT/305169984/currency-swings-grab-attention-of-limited-partners

Image result for the more you google

Yeah my thoughts exactly.

I can’t remember hedging any of the GP/LPs in stuff I’ve worked on. Personally I never hedge, too expensive, just diversify.