Private Equity Industry in Africa : Firm Survival and Growth

Availability of private equity markets in Africa are quite limited even though this type of financing creates an environment for entrepreneurial firms to gain access to finance. Availability of private equity financing opportunities potentially relieves firms’ financial constraints with likely benefits on employment and firm growth. The literature sustains this claim with evidence from other parts of the world, however, little is known about the effect of private equity on firms in economies of Sub Sharan Africa. This paper presents the landscape of this industry on this region and analyses whether private equity helps firms survive and whether these investments are associated with firm growth. Overall, results reveal that recipients of external financing from private equity firms have a higher survival probability than non-recipients, and this investment strongly correlates with proxies for firm growth. Our results suggest that the developing landscape of private equity within each investment stage in Sub-Saharan Africa is an important source of external financing for firms