Globally, private equity (PE) investing has evolved extensively to become a significant industry compared to the small niche market it used to be. It is considered to play a crucial role in the economy, by boosting innovation and growth in promising start-ups or expanding firms, as well as by fostering the restructuring of mature companies. Private equity has become an increasingly important alternative asset class for institutional investors as it may offer return as well as diversification benefits relative to traditional stock and bond market investments. 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. The study adopted a descriptive survey research design. The study was carried out for a period of 5 years, starting from year 2013 to year 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. After collection of data and testing for reliability, the data was coded and analysed with the aid of the Statistical Package for Social Sciences (SPSS). Descriptive statistics and inferential statistics were used to establish the relationship between the variables. Linear regression was carried out to test the influence of the various investment strategies on the financial performance of the private equity funds.  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.

Full Text:



Ang. A, & Sorensen, M. (2011). Risk, returns, and optimal holdings of private equity, Journal of Private Equity, 5‐122.

Bance, A. (2004). Why and how to invest in private equity. Investor Relations Committee Paper.

Bodie, Z., Kane, A & Marcus, A. J. (2011). Investments. Sixth edition. McGraw-Hill, New York

Burdel, S. (2014). Private equity secondary’s: Opening the liquidity tap. Thunderbird International Business Review, 51(6), 533–537.

Chen, P., G. Baierl & Kaplan, P. (2002). Venture capital and its role in strategic asset allocation. Journal of Portfolio Management, 28(2), 83-90.

Conroy, R. M. & R. S. Harris (2009). How good are private equity returns? Journal of Applied Corporate Finance, 19(3), 96-108.

Cressy, R., Munari, F. & Malipiero, A. (2007). Playing to their strengths? Evidence that specialization in the private equity industry confers competitive advantage. Journal of Corporate Finance 13(4), 647-669.

Cumming, D. & Johan, S. (2007). Regulatory harmonization and the development of private equity markets .Journal of Banking & Finance 31 (10), 3218-3259.

Davila, A., G. Foster & A. Gupta (2003). Venture capital financing and the growth of startup firms. Journal of Business Venturing, 18(6), 689

Diller, C. & Kaserer, C. (2012). What drives cash flow based European private equity returns? Fund inflows, skilled GPs, and/or risk? European Financial Management, 15(3), 643-675.

Driessen, J., T. C. Lin & Phalippou, L. (2014). A new method to estimate risk and return of non-traded assets from cash flows: The case of private equity funds. NBER Working Paper Series. Available at SSRN: ssrn.com/abstract=1152685.

Fraser-Sampson, G. (2011). Private equity as an asset class. John Wiley & Sons.

Gatauwa, M. J. (2014). A survey of private equity investments in Kenya, European Journal of Business and Management, 6 (3) 15-20.

Gatauwa (2014). A survey of Private Equity Investments in Kenya. European Journal of Business and Management, 6(3).

Grabenwarter, U., & Weidig, T. (2015). Exposed to the J-Curve: understanding and managing private equity fund investments. Euro money Books.

Groh, A. P. and O. Gottschalg (2008). Measuring the risk-adjusted performance of US buyouts. NBER Working Paper No. W14148.

Hinchberger, B. (2013). Private equity: new cash for expanding businesses. Brookings Papers on Economic Activity. Rochester. New York.

Kaplan, S. & Schoar, A. (2015). Private equity performance: returns, persistence, and capital flows, the Journal of Finance, 9(4).

Kaplan, S. N. & Strömberg, P. (2009). Leveraged buyouts and private equity. Journal of Economic Perspectives, 23(1), 121-146.

Kaplan, S. & Schoar, A. (2005). Private Equity Performance: Returns, Persistence and Capital Flows. Unpublished MBA Thesis, University of Nairobi.

Kiungu, B.K. (2012). The influence of behavioral biases on the trading decisions of equity fund investors: A case of British American (BRITAM) Kenya Equity Fund. Unpublished MSC Project, University of Nairobi.

Kumar, A.P. & Sandip, C. (2012). An analysis of factors affecting private equity investment decision: evidence from Singapore. International Journal of Business Research, 12 (2),

Kung’u, N.D (2013). The effect of selected macroeconomic variables on the financial performance of private equity firms in Kenya. Unpublished MBA Thesis, University of Nairobi.

Leitner, C., Mansour, A. & Nalyor, S. (2007). Alternative investments in perspective. RREEF Research, Deutsche Bank Group.

Ljungqvist, A. & M. Richardson (2003). The cash flow, return and risk characteristics of private equity. NYU Working Paper No. FIN-03-001. Available at SSRN: ssrn.com/abstract=369600.

Metrick, A. & Yasuda, A. (2017). The economics of private equity funds. Rochester, New York.

Murithi, G.N. (2012). The assessment of risk – return trade off among private equity firms in Kenya. Unpublished MSC Project, University of Nairobi.

Ndirangu, A.N (2017). The effect of firm performance on impact investment in Kenya: A case study of Jamii Bora Bank. Unpublished MBA Thesis, USIU.

Nielsen, K. M. (2011). The return to direct investment in private firms: new evidence on the private equity premium puzzle. European Financial Management, 17(3), 436–463.

Parra-Bernal, G. & Blount, J. (2011). Analysis, private equity wary of Brazil currency, prices. Reuters. Sao Paulo.

Rice. M. (2012). Private equity, the role of private equity in diversified portfolios, DiMeo Schneider & Associates, L.L.C. White Paper.

See, Y.P & Jusoh, R. (2012). Fund characteristics and fund performance: evidence of Malaysian mutual funds. International Journal of Economics and Management Sciences, 1(9), 31-43.

Tuck, H (2003). Note of private equity asset allocation. Center for Private Equity and Entrepreneurship at Tuck School of Business, Darthmouth.

Tuimising., N. (2012). Private equity in Kenya: A survey of emerging legal and institutional issues. (Unpublished PhD Dissertation). University of Warwick.


  • There are currently no refbacks.