Effects of Investment Strategies on Financial Performance of Private Equity Funds Investing in Kenya

Abstract

Globally, PE investing has undergone several transformations and has become a very important sector in comparison to small niche market it was. Its role in the economy is very important. It improves innovativeness and development in provision of startups or growing industries and also facilitating the restructuring of already existing industries. It’s been seen as new and an effective form of an organization that comes up with economies that are efficient. This study sought to assess the effects of investment strategies on the financial performance of private equity funds investing in Kenya. The study targeted all the funds managed by the 20 private equity fund investment management companies in Kenya. Descriptive survey research design was adopted. The study was conducted for a span of 5 years which was from the year 2013 to 2017. Data was sourced from the reports and websites of the various fund management companies as well as from the CMA website and the NSE website. Data collected was tested for reliability then coded and analysed using SPSS. The association that existed between the study variables was determined by performing both inferential and descriptive statistics. The effect of strategies of investment on performance of PE funds was determined by computing Linear regression. The study found that 79.8% of the financial performance of private equity funds investing in Kenya could be accounted for by leveraged buyouts, venture capital, and mezzanine financing. The study also revealed that there was a strong positive relationship between financial performance and leveraged buyouts, venture capital, and mezzanine financing. The study further revealed that leveraged buyouts significantly affected financial performance of private equity funds investing in Kenya.