Drivers of private equity investment activity: are buyout and venture investors really so different?

Kelly, Roger E.

doi:10.1080/13691066.2012.688494

Cited by 16 publications

(19 citation statements)

References 20 publications

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“…This positive effect is statistically significant at 5 percent level of significance. These findings are supported by a priori expectation, modern portfolio theory, Neo-classical of investment behaviour and the findings of Groh and Liechtenstein (2010), Clarysse et al (2009), Aizenman and Kendall (2008), Kelly (2012), Cherif and Gazdar (2011), Fé lix et al 2013, Oino (2014), Bernoth and Colavecchio (2014) and Oni (2017. This result is inconsistent with the finding of Oino (2014). From our findings, a strong capital market creates a favourable environment for PE exits through initial public offerings and the provision of valuation data for Merger and Acquisition deals.…”

Section: Discussion Of Regression Resultssupporting

confidence: 72%

“…The results showed that better business environment and deeper financial markets were important local factors that attract international venture capital. Kelly (2012) investigated the drivers of private equity activity by undertaking a panel data study for 17 European countries. By using the Generalised Method of Moments estimator they found market capitalisation to be an important determinant of PE activity.…”

Section: Theoretical and Literature Reviewmentioning

confidence: 99%

“…Most research on the determinants of private equity activity has been on developed countries. Among them are the studies of Groh and Liechtenstein (2010), Kelly (2012), Aizenman and Kendall (2008), Clarysse, Knockaert, & Wright (2009), Guler and Guillé n (2010), Cherif and Gazdar (2011), Fé lix, Pires and Gulamhussen (2013), Oino (2014) and Bernoth and Colavecchio (2014). However, Oni (2017) conducted a study on the determinants of venture capital supply in Sub-Saharan Africa.…”

Section: Introductionmentioning

confidence: 99%

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Macroeconomic Drivers of Private Equity Penetration in Sub-Saharan African Countries

Nkam¹,

Akume²,

Sama³

2019

IBR

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The objective of this study is to investigate in to the drivers of private equity penetration in Cameroon, Nigeria, Ghana, Kenya and South Africa. Secondary data was collected from private equity and venture capital data bases (CapitalIQ, Preqin, Burgiss and Mergermarket), World Bank development indicators, regional private equity and venture capital associations and country specific stock market websites. The Panel Two-Stage Least Squares Instrumental Variables (2SLS IV), Panel Corrected Standard Errors (PCSE) and Feasible Generalised Least Squares (FGLS) estimation techniques were used. This was due to potential problems of endogeneity and spherical errors of serial correlation, heteroskedasticity, cross sectional dependence and multicollinearity. The results using the 2SLS IV estimation technique show that stock market capitalisation, GDP per capita, banking credit to private sector, real exchange rate and private investments are key macroeconomic drivers of private equity penetration in the selected Sub-Saharan African countries. Inflation had negative and insignificant effect on private equity penetration in the selected countries. The results using the PCSE and FGLS estimation techniques show that the signs of all the variables remain the same as was the case in the 2SLS IV estimation technique though the magnitudes were different. However, the results of PCSE and FGLS estimation techniques show that banking credit to private sector is significant in the FGLS model while private investments is significant in the PCSE model. GDP per capita, real exchange rate, stock market capitalisation and inflation are significant in both the PCSE and FGLS estimation techniques.

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Section: Discussion Of Regression Resultssupporting

confidence: 72%

Section: Theoretical and Literature Reviewmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Macroeconomic Drivers of Private Equity Penetration in Sub-Saharan African Countries

Nkam¹,

Akume²,

Sama³

2019

IBR

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“…First, previous studies (e.g., Kelly, 2012) suggest there are significant differences between VC and BO investments. Therefore, to capture these differences, we use two dummy variables: VC, which is set at 1 when firms have received PE funding as start-up, development or expansion capital and 0 otherwise; and BO, which is set at 1 when PE investors are involved in replacement or buy-out investments and 0 otherwise.…”

Section: Independent Variablesmentioning

confidence: 97%

Do the effects of private equity investments on firm performance persist over time?

Meles

Monferrà

Verdoliva

2014

Applied Financial Economics

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This study examines whether the effect of private equity (PE) investments persists over time or wears off after the PE investors exit. Unlike previous studies that focus on the PE-backed initial public offerings (IPOs), we constructed a unique and distinctive dataset comprising PE investments exiting both via IPO and other common ways (i.e., trade sale, secondary buy-out and buy-back). Consistent with Jain and Kini (1995), we observe that PE-backed firms outperform other firms. Our results shed light on existing literature because we find that whether PE investments continue to benefit the portfolio firms is strictly related to the type (venture capital versus buy-out) and length of the PE investment, the nature of the PE investor (bank-based versus nonbank based), and the exit strategy (IPO versus other exit strategies).

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“…Clarysse, Knockaent and Wright (2009) explained that the amount of early stage venture capital supply is determined by stock market capitalisation. Kelly (2012) identified the positive impact of market capitalisation on venture capital investments and points out that an increase in market capitalisation results in an increase of available funds for venture capital. Furthermore, Cherif and Gazder (2011) found that there is a positive association between market capitalisation and venture capital supply.…”

Section: Literature Reviewmentioning

confidence: 99%

Determinants of Venture Capital Supply in Sub-Saharan Africa

Oni¹

2017

JEBS

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The purpose of this paper is to determine the variables that influence venture capital supply in Sub-Sahara Africa. The study developed econometric models and examined a 10-year period (2006 to 2015) pertaining to eight (8) Sub-Sahara African countries namely: Botswana, Ivory Coast, Ghana, Kenya, Mauritius, Nigeria, South Africa and Uganda. The empirical model includes six determinants (initial public offering, market capitalisation, unemployment rate, foreign direct investment inflow, inflation rate and trade openness). Secondary data was utilised for the study. The primary sources of data were the World Bank Development indicators and Preqin data base. All the statistical analyses in the study were performed using E-views version 8. Panel data models of pooled, fixed and random effects were employed. The results suggest that there is a significant positive relationship between initial public offering, market capitalisation and venture capital supply. Second, there is no significant relationship between unemployment rate, foreign direct investment inflows, trade openness and venture capital supply. Based on the empirical findings, this study recommends that Sub-Sahara African governments should attempt to develop their economies by improving infrastructure and corporate governance. There is also a need for African countries to develop the equity market.

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Drivers of private equity investment activity: are buyout and venture investors really so different?

Cited by 16 publications

References 20 publications

Macroeconomic Drivers of Private Equity Penetration in Sub-Saharan African Countries

Macroeconomic Drivers of Private Equity Penetration in Sub-Saharan African Countries

Do the effects of private equity investments on firm performance persist over time?

Determinants of Venture Capital Supply in Sub-Saharan Africa

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