Argentum Award 2022: PE-backed companies more robust during pandemic

Keyu Zang, a Chinese student at the Stockholm School of Economics, is the winner of this year’s Argentum Award. Here he is in front of Stockholm, the city that has been his home through the pandemic. Now, he is off to Switzerland to pursue his PhD. “I really enjoy Sweden in the summertime; it is not too hot, and the air is fresh,” he says. Photo: Private

Keyu Zang of the Stockholm School of Economics is the winner of the 2022 Argentum Award. Zang’s thesis shows that PE-backed firms in Sweden increased in investment, received more credit and equity inflow, and were more likely to receive government support in 2020 than comparable non-PE firms affected by the covid-19 pandemic.

“Compared to China, I am fascinated by the crucial role that private equity plays in the Swedish economy and how mature the market is. I hope that my learnings can contribute to helping the PE industry in my country someday,” Zang says over a Teams call in his student flat in Stockholm.

It is raining in the Swedish capital when Argentum speaks with Zang, his favourite type of weather because of the fresh air. It makes him most productive. He is used to the hot and humid climate of the Guangdong province of China, where he completed his BSc at the Chinese University of Hong Kong, Shenzhen.

“Before coming to Sweden, I interned at a small Chinese PE firm. Every week, my boss would invite a group of experts to discuss the present and future of the semiconductor industry in our country and give suggestions to the company managers. My experience here gave me the feeling that private equity can help SMEs grow quickly and boost the economy,” Zang says.

He looked to Sweden for his master’s degree and to learn more about private equity. In the Summer of 2021, Zang started working at the Swedish House of Finance as a research assistant to Professor Per Strömberg, or ‘Professor Per’ as he fondly calls him, and Dr Christian Thomann.

“It was a large PE research project, and as we had access to recent data and as the pandemic severely hit our normal life, I decided to investigate how the pandemic impacted the performance of PE-backed firms in my master’s thesis,” Zang says.

Effect of PE most pronounced in hard-hit industries

The thesis builds upon earlier research that used UK data on the performance of PE firms in the financial crisis. Because there exists comprehensive data on Swedish private companies, Zang was able to measure the impact and performance of private equity.

“Compared to 2008, the pandemic did not cause systemic damage to the finance sector and a new financial crisis. However, it did cause a short-term debt shortage and investment decline. I find evidence that PE helped companies raise debt and inject more equity when the pandemic hit. In short, PE-backed companies had a growth in total assets compared to their peers,” Zang explains.

The effect was more pronounced in companies with a worse financial situation caused by the pandemic in industries such as hospitality and tourism. Furthermore, smaller companies – defined by total net sales – received more help from private equity than larger ones.

Zang points to some factors that he believes decreased the financial fragility of PE-backed companies:

“PE managers are flexible, have crisis knowledge and resources, and can communicate with the government and banks. They reduce the information asymmetry and make it easier to trust companies in their portfolios. PE ownership combined with increased government support has led these companies to perform better than their peers,” he says.

Gives insight into PE’s robustness

“The thesis showed that private equity is even more significant among firms facing severe financial constraints. Overall, private equity decreased firms’ financial fragility during the pandemic,” says Trond M. Døskeland, Professor at NHH and head of the Argentum Award committee.

“The question is interesting and topical. It examines the financial decisions and performance of PE-backed firms with a comparable group of firms during the pandemic. The answers can give insight into how robust the PE model is to crises,” Døskeland says.

Regarding the method used to determine the difference between PE-backed and control firms, one needs to implement a proper identification strategy.

“The candidate exploits the unexpected negative shock from the pandemic to identify how robust the PE model is for crises. Zang seems to be doing it right. One can always discuss whether the matching is adequate, but that is also debated in papers published in top journals,” Døskeland adds.

Hans K. Hvide, Professor at The Department of Economics at the University of Bergen, and Tom Meling, Postdoctoral Scholar University of Chicago, were also part of the committee.

Off to Switzerland in the Fall

Zang is soon wrapping up his adventure in the Nordics as he moves to Switzerland over the summer to pursue his PhD at the École Polytechnique Fédérale de Lausanne.

“I will be graduating from SSE this summer, and I am still working for Professor Per and trying to expand on the findings in my thesis. Before I can call it an academic paper, there is still much work to be done. I will continue my research in Switzerland,” he says.

Now, the focus is on his PhD. He does not foresee a career in the private equity industry, at least not in the short term.

“However, I will continue researching the industry to see what benefits it brings to the economy and how to treat private equity correctly to avoid possible financial risk.”

“You have written about the effect of the pandemic in the midst of it. How did you cope yourself?”

“I spent most of the time in my flat. The weather was freezing in the winter, and I was quite bored. I enjoyed my sessions with Professor Per every other week, where he made me do short presentations to find out where I needed to improve my thesis. I hope we can continue our cooperation in the coming years,” Zang concludes.

Argentum Award 2022

  • The winner of the Argentum Award 2022 is Keyu Zang, who wrote the thesis Private Equity in Crisis: Evidence from the COVID-19 Pandemic as part of his M.Sc. in Finance at the Stockholm School of Economics in the spring of 2021.
  • The Award Committee consisted of Prof. Trond M. Døskeland (Norwegian School of Economics, NHH), Hans K. Hvide (University of Bergen), and Tom Meling (University of Chicago).
  • The Committee was unanimous in its decision and concluded that the thesis “can give insight into how robust the PE model is to crises.”
  • Zang’s tutor was Per Strömberg, SSE Centennial Professor of Finance and Private Equity.

Facts about the award

  • Each year, Argentum hands out an award for the best master’s thesis within private equity in the Nordics, with a cash prize of NOK 20 000.
  • The award was established to encourage students to analyse topics within the field of private equity. Further, the award should encourage the production of theses of the highest quality.
  • A committee appointed by the Argentum Centre for Private Equity at NHH, the Norwegian School of Economics, will assess the submitted theses.
  • You can apply for the Argentum Award 2022 by sending the thesis, supervisor name, and academic institution’s name to The deadline is March 1st, 2023.