What drives private equity investments returns - evidence from African investments
by Eymen Errais; Baha Gritly
International Journal of Entrepreneurship and Small Business (IJESB), Vol. 47, No. 2/3, 2022

Abstract: This paper explores private equity return drivers in African countries. We focus on factors driven by macroeconomic, industry, and deal-level data instead of the classic investees fundamentals. This research uses a comprehensive dataset covering 242 deals closed between 1995 and 2020 in 194 companies, operating in 24 African countries, across 14 funds. Our paper shows that exit routes, co-investments, and cash-out structures have a positive impact on returns, while debt usage, firm experience, and ticket size have a limited role in driving returns. In terms of external factors, GDP growth has a positive impact on returns, while business environment variables are found to have a limited impact. The sector effect on returns has also been found to be significant, further reinforcing the importance of sector allocation as a performance driver in private equity.

Online publication date: Thu, 03-Nov-2022

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