Role of private equity in emerging markets to the economy: case study of Kenya

Abstract

Private equity is a new avenue of channelling foreign direct investment and is emerging in many countries especially in Africa where large sectors of the economies have remained unexploited. This paper seeks to examine the industry‟s key actors in Kenya, their role, business processes and impact they have had on companies and the economy at large. There is limited information on the role and socio economic impact of Private Equity firms on Kenya‟s private sector and this research seeks to address that deficiency while also establishing the industry‟s growth and size. The study examines policy issues such as legal and institutional regulations and relies on a mixed method study with qualitative data being collected through interviews conducted with private fund managers and beneficiaries. Secondary quantitative data which was collected to support the qualitative data and assist in making accurate inferences about the industry was mainly collected from the records of PE firms, economics journals, websites, capital markets authority and Africa Assets. With the increase in number of Private Equity funds in Africa over the last year with Kenya in particular getting many new foreign investments, it begs the question as to whether these foreign investors are exploiting the country to reap the benefits of an emerging economy or are they in fact growing the economy?