Private Equity Capital in a Less Developed Economy: Evidence, Issues and Perspectives

Melusi Mpofu () and Mabutho Sibanda ()
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Melusi Mpofu: University of KwaZulu-Natal
Mabutho Sibanda: University of Stellenbosch Business School

Acta Universitatis Danubius. OEconomica, 2015, issue 11(5), 17-29

Abstract: This study investigates the structure of the private equity industry and issues that impact on its development and growth in Zimbabwe. Studies conducted internationally have unequivocally demonstrated the importance of private equity investments in assisting firms at start/growth phase and decline phase. However there is a dearth of literature on how these financial intermediaries assist in unlocking firm value from an emerging markets perspective. The study uses the document analysis and an exploratory research paradigms to achieve the stated objectives. The study finds that the venture capital industry in Zimbabwe mimics similar industries in other countries except that it is constrained by market liquidity. Lack of regulation and viable business sectors coupled with excessive risks in the political economy narrows the scope of private equity operations. Several issues impacting on the development of the private equity industry are identified and evaluated. The study has policy implications for the development of regulatory framework to bolster the growth of the private equity industry in emerging market economies. This study provides new evidence and policy suggestions on the operations of the private equity industry in a liquidity constrained and less developed economy.

Keywords: private equity; venture capital; financial intermediation; start-up business (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:dug:actaec:y:2015:i:5:p:17-29

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