Analysing the criteria of private equity investment in South Africa

Journal of Economic and Financial Sciences

Field Value
Title Analysing the criteria of private equity investment in South Africa
Creator Hamman, Albertus Nel, Ines Oberholzer, Merwe
Subject private equity investment; investment criteria; investment decision; institutional theory; South Africa
Description Orientation: Within the conceptual paradigm that the institutional environment may influence investment criteria, this study argues that South Africa has a unique socio-economic environment and matters such as black economic empowerment, corruption, redistribution of land and other related matters pose unique challenges to private equity investors.Research purpose: The purpose was to determine the critical criteria that present a challenge to private equity investment professionals when considering an investment in business ventures in South Africa.Motivation for the study: As far as can be established, similar research to identify and prioritise the investment criteria used by private equity investors has not been done or published in South Africa.Research approach/design and method: A literature review was conducted to develop qualitatively a 51-component questionnaire, which was quantitatively tested by a convenience sample of 44 registered private equity investment professionals in South Africa.Main findings: Descriptive statistical analysis revealed that the most important individual criteria component is the intention of co-shareholders. From a factor analysis, the most important factors are the internal and the external abilities of the fund manager to identify investment opportunities.Practical/managerial implications: The new prioritised investment decision-making criteria may aid potential target companies, wanting to attract funding from private equity investors, to organise themselves to become attractive investment opportunities.Contribution/value-add: A new prioritised list was developed to better understand how South African private equity investment professionals make investment decisions.
Publisher AOSIS
Date 2021-04-26
Type info:eu-repo/semantics/article info:eu-repo/semantics/publishedVersion —
Format text/html application/epub+zip text/xml application/pdf
Identifier 10.4102/jef.v14i1.608
Source Journal of Economic and Financial Sciences; Vol 14, No 1 (2021); 15 pages 2312-2803 1995-7076
Language eng
Rights Copyright (c) 2021 Albertus Hamman, Ines Nel, Merwe Oberholzer