PRIVATE EQUITY CAPITAL AND GROWTH OF ENTREPRENEURIAL FIRMS IN NIGERIA

Abstract

The general purpose of this study is to examine the effect of private equity on the profitability of selected Small and Medium Scale Enterprises in Nigeria while the specific objective is to examine the extent to which development capital, growth capital and venture capital  affect the profitability  of selected Small and Medium Scale Enterprises. Cross sectional data was sourced from financial statement of Small and Medium Scale Enterprises from 2015 – 2018. Panel data multiple regressions with econometric view were used as data analysis techniques. The study modeled the pooled effect, fixed effect and the Random effect of profit after tax as the function of development capital, growth capital and venture capital. Findings from the pooled effect result revealed an R² 55.4% of explained variation and F-statistics of 3.145 (0.004510). The fixed effect revealed an R² 44.1% and F-statistics of 8.4681 (0.004564) while Random effect revealed an R² of (0.003257). The predictor variables have positive but insignificant effect on the dependent variable except development capital at pooled effect. The research concludes that private equity has no significant relationship with profit after tax of the Small and Medium Scale Enterprises. The study recommends that private equity investors should enhance investment in Small and Medium Scale Enterprises.