What drives private equity investments returns - evidence from African investments

Eymen Errais and Baha Gritly

International Journal of Entrepreneurship and Small Business, 2022, vol. 47, issue 2/3, 305-322

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.

Keywords: private equity; PE; internal rate of return; IRR; emerging markets. (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijesbu:v:47:y:2022:i:2/3:p:305-322

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