WEALTH MANAGEMENT WEALTH MANAGEMENT
THE PRIVATE EQUITY ATTRACTIVENESS INDEX
The Private Equity Attractiveness Index is the result of a long and exhaustive research project that looked at how attractive various countries were in the eyes of private equity limited partnerships and venture capitalists.
The project was first launched in 2006 at the ISEE Business School in Barcelona and was sponsored by Ernst & Young and DLA Piper and it initially only covered European countries. After success in this area the project was rolled out globally. Using in excess of 300 data sets from more than 200,000 sources, information was gathered and collated and this was used to index each country in the study in terms of its attractiveness for private equity. The project had a single aim at heart – to show potential investors which countries and areas offered the best return on investments with minimum risk.
In order to get the most accurate results there were key areas that were looked at in detail. Economic activity, inflation rate, taxation, capital markets and their size and liquidity, investor protection, corporate governance, entrepreneurial culture and opportunities, social environment and human environment unemployment rates and more were all examined. By using the data that was collected over a period of time, the index was much more realistic.
Significance of the Private Equity Attractiveness Index
The Private Equity Attractiveness Index is highly significant as it uses both historical and recent data in order to index the countries that are listed on it. This means that as more data becomes available, the index will evolve and become even more accurate and valid to investors. Any individual or business in the private equity sector is now able to use the index to make choices on a broader scope than ever before. The Attractiveness Index also provides a way for investors to better understand where their capital should be allocated. John Harley of Ernst
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& Young said of the Index “There will undoubtedly be comparative winners and losers, and the Global Venture Capital and Private Equity Country Attractiveness Index will prove to be a valuable tool in helping funds navigate through this uncertain time,”
Which countries were indexed?
There were 66 countries studied, which included Kenya, Morocco, India, China, Hong Kong, Australia, Egypt, Brazil, Canada and France to name a few. Topping the list is the USA due to its large amount of economic activity, an attractive human and social environment and a strong entrepreneurial culture. Russia, ranking at number 48 is in a very different position. Whilst the country has a high rate of growth and a lot of economic power, it is also in competition with other countries in the same area, Turkey at number 46, Lithuania at number 47 and Croatia at 50. Their neighbours can
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