Private Equity and Venture Capital in Brazil: An Analysis of its Recent Evolution

Carvalho, Antônio Gledson de; Netto, Humberto Gallucci; Sampaio, Joelson Oliveira

doi:10.2139/ssrn.1996729

Cited by 4 publications

(5 citation statements)

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“…Some scholars criticise the profitability method in measuring business performance because they restrict it to past performance and unrealistic approach of treating depreciation and amortisation as part of the annual expenses; however, they do not involve any direct cash flows. These findings were consistent with the study (Biney 2018;Carvalho et al 2013;Kwame 2017;Paglia & Harjoto 2014).…”

Section: Empirical Analysis and Discussion Of Resultssupporting

confidence: 93%

“…Despite the appealing results, the commercial databases on which the authors relied could provide conflicting results attributable to data protection and privacy of private equity firms. Further research conducted in an emerging economy, such as Uganda, is desirable, where little or no empirical research is done to provide empirical data to benchmark future research Carvalho, Netto and Sampaio (2013). investigated the influence of PE/VC on SMEs' performance in Brazil.…”

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confidence: 99%

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Impact of venture capital financing on small- and medium-sized enterprises’ performance in Uganda

Kato

Tsoka

2020

The Southern African Journal of Entrepreneurship and Small Busi

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Background: Small- and medium-sized enterprises (SMEs) in Africa and Uganda suffer from lack of finance for their survival and growth. This liquidity emergency motivated start-ups struggling to find alternative financing sources different from conventional bank lending. Venture capital financing evolved as viable financial mechanisms to revive SMEs’ performance.Aim: This article analysed the impact of venture capital financing on SMEs’ performance in Uganda. This is the first empirical study that related and brought together the understanding of business entrepreneurs with those of venture capitalists.Setting: The rate of start-up business failure in Africa remains high, triggering an enormous threat to policy-makers and international development partners. Besides, the literature is diminutive, intermittent and fragmented to document venture capital performance.Methods: The study adopted a mixed-method and used survey questionnaires administered to 90 SMEs and complemented with data from semi-structured interviews. We used multiple regression analysis and correlation coefficient for data analysis generated from the Statistical Package for the Social Sciences.Results: Empirical evidence exhibited tremendous growth of venture-capital-backed companies in sales turnover, profitability and return on assets matched to the non-venture-capital-backed firms.Conclusion: This article presented the first extensive empirical study confirming evidence of venture capital financing for the enhancement of SMEs’ performance and development in Uganda regarding revenue growth, profitability and return on assets. This study recommended to policy-makers and the business fraternity to develop policy frameworks tailored to the enhancement of the venture capital landscape growth.

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Section: Empirical Analysis and Discussion Of Resultssupporting

confidence: 93%

mentioning

confidence: 99%

Impact of venture capital financing on small- and medium-sized enterprises’ performance in Uganda

Kato

Tsoka

2020

The Southern African Journal of Entrepreneurship and Small Busi

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“…For example, the world economic recession of the years 2007 and 2008 that was one of the biggest and deepest financial crises that the world has faced since the Great Depression of the years 30 as reported by Love et al (2016). In addition, Brazil went through an economic boom during the beginning of the years 2000s that was maintained until 2011 and this produced a significant increase of IPOs in 2007 (Carvalho, 2014). These circumstances support us to determine that the period from 2008 to 2017 was appropriate for the study of stock price volatility given the desired conditions explained.…”

Section: Sample and Datamentioning

confidence: 99%

Does corporate governance matter for stock returns volatility in the Brazilian context?

Cardoso

Carr

Rogers

2019

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Purpose This paper aims to examine the Brazilian stock market behavior and volatility term structure of two portfolios that, theoretically, the companies that comprise them have different degrees of idiosyncratic risk: one portfolio consists of firms with good corporate governance and the other comprises firms with poor corporate governance. Design/methodology/approach The sample comprises corporate firms listed in the Brazilian stock market during the period from January 2008 to December 2017. Generalized autoregressive conditional heteroskedasticity models were applied. Findings The results show that the portfolio of firms with good corporate governance practices presents fluctuations that are more often temporary and reactive, with trends’ persistence of shorter durations, when considering the punctual volatility of the parameters estimated. This opposed expectation that the portfolio comprised of companies with good governance practices are better protected from short-term movements. However, over time and with standard error measures in consideration, both portfolios’ volatilities behave in similar ways. These findings may be related to Brazilian market characteristics, such as ownership concentration, ineffective corporate boards and the ever-developing nature of the stock market in Brazil. Any one of these characteristics present challenges to effective enforcement of the corporate governance practices in the Brazilian context. Originality/value The findings are potentially to the interest of researchers and practitioners for several reasons. First, this paper contributes to the growing literature on the relationship between corporate governance and market volatility. Second, it informs that volatility in the Brazilian context is likely only partially, if at all, influenced by corporate governance practices. Third, longitudinally, both indices follow the same pattern and converge to the same place.

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“…In addition, companies financed by PE/VC may be more likely to issue shares, since the exit of these funds is in part via IPO. Carvalho et al (2013) show that 25% of exits from PE/VC funds between 2004 and 2009 were through IPO. Carvalho, Pinheiro and Sampaio (2015) also found evidence that US companies funded by PE/VC are associated with a lower level of leverage for at least 8 years after the IPO.…”

Section: Leveragementioning

confidence: 99%

“…These companies, in addition to having more capital options, must return to the PE/VC funds the investments made by them. Carvalho et al (2013) show that 25% of the exit from investment of PE/VC funds between 2004 and 2009 were through IPO. In this sense, companies invested by PE/VC are more likely to issue shares instead of debt.…”

Section: Introductionmentioning

confidence: 99%

The Impact of Private Equity and Venture Capital Funds on post-IPO Operational and Financial Performance in Brazilian invested companies

Sincerre

Sampaio

Famá

et al. 2019

BBR

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The present article seeks to analyze the legacy and its persistence over time in terms of financing and operational policies and financial performance, of companies invested by Private Equity and Venture Capital funds (PE/VC). The PE/VC industry is characterized by the function of identifying companies with large return potentials and that grow arithmetically -due to capital constraints -to provide adequate and necessary sources of capital and experience for exponential growth. In this study, we used four measures that relate to companies' financial policies and their persistence over time: i) cash & equivalents; ii) leverage; iii) Return on Assets (ROA); and iv) sales growth. The results suggest that PE / VC invested companies imply higher levels of cash & equivalents and are associated with a lower level of leverage during the first 5 years after the IPO. In addition, companies financed by PE/VC funds show higher profitability and higher sales growth compared to non-invested companies in the short term, i.e., in the first 3 years after the IPO.

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Private Equity and Venture Capital in Brazil: An Analysis of its Recent Evolution

Cited by 4 publications

References 10 publications

Impact of venture capital financing on small- and medium-sized enterprises’ performance in Uganda

Impact of venture capital financing on small- and medium-sized enterprises’ performance in Uganda

Does corporate governance matter for stock returns volatility in the Brazilian context?

The Impact of Private Equity and Venture Capital Funds on post-IPO Operational and Financial Performance in Brazilian invested companies

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