|By PR Newswire||
|August 7, 2014 02:01 AM EDT||
DUBAI, UAE, August 7, 2014 /PRNewswire/ --
White paper published by MBA graduates of Harvard Business School in collaboration with Growthgate Capital exposes myths surrounding PE
Following a period of contraction and consolidation, the private equity (PE) industry in the MENA region is beginning to show signs of a recovery, both in terms of deal volume and size. However, PE's challenge has been the perception that PE investors focus excessively on short-term results, and have a negative effect on job creation and the long-term health of the economies in which they operate.
The white paper published by MBA graduates of Harvard Business School (HBS) in collaboration with the GCC-based PE firm Growthgate Capital, seeks to debunk some of the myths surrounding PE, by reviewing how local and international PE firms have been able to add considerable value to portfolio companies and the broader economy. The analysis of this paper suggests that many of the beliefs surrounding the impact of PE firms, such as job destruction and an excessive focus on short-term profitability, do not hold.
The white paper demonstrates that PE funds globally have improved performance of target companies by reducing constraints for companies in need of external capital, focusing on investments in innovation, increasing capital expenditures, and instilling better corporate governance and operational practices.
Referring to a number of recent academic studies, the paper also confirms that companies acquired by PE funds grow significantly more than comparable firms in terms of sales and capital employed, and often in employment. For instance, a comprehensive study using data from 3,200 deals in the United States reveals that on average, private equity buyouts raise firm productivity by over 2% in the two years after the buyout. Across both good (2005-2007) and bad times (2008-2012), PE makes a net contribution to employment growth. The study also shows that PE increases not only employment but also labor productivity as it increased by over 7% a year from the time PE acquired companies in the sample to the point of exit.
Another study, using data from 839 European deals over 1994-2004, shows that between the four years preceding the transaction, and the four subsequent years, employment, assets, and sales growth of PE targets are, respectively, 18%, 12%, and 12% higher than the non-PE backed firms. These transactions were largely growth equity deals rather than the leveraged buyouts that dominate the U.S. market, and those may be more representative of the PE transactions that dominate emerging market regions such as MENA.
1. Davis, Haltiwanger, Hanley Jarmin, Lerner, Miranda, 2014, "Private Equity, Jobs, and Productivity" (American Economic Review).
2. Ernst & Young, 2013, "Myths and challenges: How do private equity investors create value? A study of 2012 European exits"
3. Boucly, Sraer, Thesmar, 2011, "Growth LBOs" (Journal of Financial Economics)
Furthermore, the white paper tracks the evolution of the PE asset class in the MENA region. While the PE landscape in the region has been challenging, LPs have now consolidated their bets on 10-15 PE firms that have demonstrated an ability to generate superior returns. PE firms that continue to innovate in terms of their funding model and deal sourcing and build portfolio operation capabilities are likely to continue doing well. As the evidence shows, through such investments, businesses in the region are likely to grow faster, and become more efficient and competitive on an international stage.
As a general observation, PE in MENA has proven to be a "sticky" form of investment, while investments in public equity proved feckless. PE investments in MENA are long term, and often enhance the companies that they finance. As the industry matures, the true impact of PE involvement in the region will become clearer, but the evidence from other regions suggests that it is likely to play a very positive role.
The white paper was supervised and co-edited by Prof. Josh Lerner, the Jacob H. Schiff Professor at HBS and Director of the Private Capital Research Institute.
About Growthgate Capital
Growthgate Capital focuses on growth equity capital investments in middle market companies operating principally in the GCC and in other select markets in the MENA region. Growthgate Capital was formed in late 2007 with $200m in permanent capital contributed by a handful of shareholders including State-owned banks, public pension funds, and single-family offices. As of December 31, 2013, Growthgate Capital has circa $1.7bn in Assets-under-Monitoring. The firm has conducted several investments in various sectors including: logistics and transport, building materials, steel fabrication, waste management, animation and themed entertainment, private jet management, biometrics, food processing and catering. The firm is managed by Growthgate Partners.
For more information, please visit http://www.growthgate.com
Media & Corporate Contact:
More and more brands have jumped on the IoT bandwagon. We have an excess of wearables – activity trackers, smartwatches, smart glasses and sneakers, and more that track seemingly endless datapoints. However, most consumers have no idea what “IoT” means. Creating more wearables that track data shouldn't be the aim of brands; delivering meaningful, tangible relevance to their users should be. We're in a period in which the IoT pendulum is still swinging. Initially, it swung toward "smart for smar...
Oct. 22, 2016 11:30 AM EDT Reads: 472
Governments around the world are adopting Safe Harbor privacy provisions to protect customer data from leaving sovereign territories. Increasingly, global companies are required to create new instances of their server clusters in multiple countries to keep abreast of these new Safe Harbor laws. Is it worth it? In his session at 19th Cloud Expo, Adam Rogers, Managing Director of Anexia, Inc., will discuss how to keep your data legal and still stay in business.
Oct. 22, 2016 11:30 AM EDT Reads: 1,404
@ThingsExpo has been named the Top 5 Most Influential Internet of Things Brand by Onalytica in the ‘The Internet of Things Landscape 2015: Top 100 Individuals and Brands.' Onalytica analyzed Twitter conversations around the #IoT debate to uncover the most influential brands and individuals driving the conversation. Onalytica captured data from 56,224 users. The PageRank based methodology they use to extract influencers on a particular topic (tweets mentioning #InternetofThings or #IoT in this ...
Oct. 22, 2016 11:00 AM EDT Reads: 8,214
Successful transition from traditional IT to cloud computing requires three key ingredients: an IT architecture that allows companies to extend their internal best practices to the cloud, a cost point that allows economies of scale, and automated processes that manage risk exposure and maintain regulatory compliance with industry regulations (FFIEC, PCI-DSS, HIPAA, FISMA). The unique combination of VMware, the IBM Cloud, and Cloud Raxak, a 2016 Gartner Cool Vendor in IT Automation, provides a co...
Oct. 22, 2016 10:45 AM EDT Reads: 1,143
P2P RTC will impact the landscape of communications, shifting from traditional telephony style communications models to OTT (Over-The-Top) cloud assisted & PaaS (Platform as a Service) communication services. The P2P shift will impact many areas of our lives, from mobile communication, human interactive web services, RTC and telephony infrastructure, user federation, security and privacy implications, business costs, and scalability. In his session at @ThingsExpo, Robin Raymond, Chief Architect...
Oct. 22, 2016 10:45 AM EDT Reads: 3,618
So you think you are a DevOps warrior, huh? Put your money (not really, it’s free) where your metrics are and prove it by taking The Ultimate DevOps Geek Quiz Challenge, sponsored by DevOps Summit. Battle through the set of tough questions created by industry thought leaders to earn your bragging rights and win some cool prizes.
Oct. 22, 2016 10:30 AM EDT Reads: 3,629
SYS-CON Events announced today that SoftNet Solutions will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. SoftNet Solutions specializes in Enterprise Solutions for Hadoop and Big Data. It offers customers the most open, robust, and value-conscious portfolio of solutions, services, and tools for the shortest route to success with Big Data. The unique differentiator is the ability to architect and ...
Oct. 22, 2016 10:15 AM EDT Reads: 528
SYS-CON Events announced today that Niagara Networks will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Niagara Networks offers the highest port-density systems, and the most complete Next-Generation Network Visibility systems including Network Packet Brokers, Bypass Switches, and Network TAPs.
Oct. 22, 2016 09:30 AM EDT Reads: 1,256
SYS-CON Events announced today that Embotics, the cloud automation company, will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Embotics is the cloud automation company for IT organizations and service providers that need to improve provisioning or enable self-service capabilities. With a relentless focus on delivering a premier user experience and unmatched customer support, Embotics is the fas...
Oct. 22, 2016 09:15 AM EDT Reads: 713
In an era of historic innovation fueled by unprecedented access to data and technology, the low cost and risk of entering new markets has leveled the playing field for business. Today, any ambitious innovator can easily introduce a new application or product that can reinvent business models and transform the client experience. In their Day 2 Keynote at 19th Cloud Expo, Mercer Rowe, IBM Vice President of Strategic Alliances, and Raejeanne Skillern, Intel Vice President of Data Center Group and ...
Oct. 22, 2016 09:15 AM EDT Reads: 1,413
SYS-CON Events announced today that StarNet Communications will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. StarNet Communications’ FastX is the industry first cloud-based remote X Windows emulator. Using standard Web browsers (FireFox, Chrome, Safari, etc.) users from around the world gain highly secure access to applications and data hosted on Linux-based servers in a central data center. ...
Oct. 22, 2016 08:45 AM EDT Reads: 2,039
Virgil consists of an open-source encryption library, which implements Cryptographic Message Syntax (CMS) and Elliptic Curve Integrated Encryption Scheme (ECIES) (including RSA schema), a Key Management API, and a cloud-based Key Management Service (Virgil Keys). The Virgil Keys Service consists of a public key service and a private key escrow service.
Oct. 22, 2016 08:30 AM EDT Reads: 933
SYS-CON Events announced today that Cemware will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Use MATLAB functions by just visiting website mathfreeon.com. MATLAB compatible, freely usable, online platform services. As of October 2016, 80,000 users from 180 countries are enjoying our platform service.
Oct. 22, 2016 08:30 AM EDT Reads: 726
Data is the fuel that drives the machine learning algorithmic engines and ultimately provides the business value. In his session at Cloud Expo, Ed Featherston, a director and senior enterprise architect at Collaborative Consulting, will discuss the key considerations around quality, volume, timeliness, and pedigree that must be dealt with in order to properly fuel that engine.
Oct. 22, 2016 08:15 AM EDT Reads: 3,758
All clouds are not equal. To succeed in a DevOps context, organizations should plan to develop/deploy apps across a choice of on-premise and public clouds simultaneously depending on the business needs. This is where the concept of the Lean Cloud comes in - resting on the idea that you often need to relocate your app modules over their life cycles for both innovation and operational efficiency in the cloud. In his session at @DevOpsSummit at19th Cloud Expo, Valentin (Val) Bercovici, CTO of So...
Oct. 22, 2016 08:15 AM EDT Reads: 2,097