Browsing by Author "Hayat, Ahmed"

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    Private Equity Investment in Ethiopia :Practices &Challenges
    (A.A.U., 2019-10) Hayat, Ahmed; Gebremedhin, G/Hiwot(Ato.)
    Private companies are important to national economies because they contribute significantly to employment and GDP growth of a country. However, the source of finance to help the growth of the private sector in Ethiopia is limited to the country’s commercial banks, which lack the capital or capacity to fund the growth needed by the private sector. Private equity can be a complementary source of finance to help grow the private sector in Ethiopia. The general objective of this study is to examine how the phenomenon of Private Equity investment is practiced in Ethiopia and to assess challenges of private equity investment in Ethiopia , mainly from fund manager’s perspective.In line with the stated purpose of using a fund manager’s perspective as well as limited time and resources, pure asset owners and entrepreneurs were not interviewed. The study used qualitative data, which were gathered through literature study and in-depth interview. The thesis adopted exploratory approach. The study is qualitative and based on in-depth interviews with people active in the Ethiopian PE investing space. Findings are analyzed and discussed based on data gatheredand through a literature study reviewed. The major findings of this study revealed that PE firm in Ethiopia is at early stage but still growing and also identified challenges for both privately owned companies and private equity investors. For privately owned companies, the challenges include loss of ownership stake, loss of management control, and lack of understanding of private equity investment. For private equity investors, the challenges include lack of exit options, risk of capital repatriation, difficulty to register capital, complexity of family-owned business, size of exiting enterprise, lack of financial reporting standard, and regulation restriction and modification. In addition, two major categories of benefits of private equity investment were identified. Finally, the study concluded by providing recommendations that enable Ethiopia to benefit from private equity, which includes exit strategies, easing capital repatriation, improving registration process, supporting improvement of financial reporting, and policy consistency.