Equity and Quasi Equity

Recently, there have been numerous research studies by McKinsey, the Boston Consulting Group, the Kaufman Foundation, Dow Jones and the National Center for Women in Technology that have shown that gender diversity significantly increases profitability, productivity and return on investment.Nonetheless, over 90 percent of venture capital investments in the US go to all male teams! This is an almost unbelievable number because intuitively we know that diversity of any kind allows for better decision making and risk mitigation. Companies succeed when different perspectives are incorporated in their strategies.

The difficulties faced by SMEs in getting finance, especially in the developing world, have been well documented. The causes are equally well known. First, traditional bank financing (secured or cash-flow based) is often not available due to the lack of adequate collateral or the opaque modus operandi of many SMEs. Also, financial markets may not be sufficiently well developed to facilitate traditional private equity (PE) financing of SMEs. A typical private equity (PE) firm or fund requires controlling positions in a company it invests. But in Sub-Sahara Africa, most small business people are both owner and operator of lifestyle businesses and have little interest in letting go of control of their company. Another constraint to the traditional PE financing model is the lack of exit channels such as a well-functioning initial public offering (IPO) or merger and acquisition (M&A) market. 

Through the investments in our region, the EBRD has become the largest private equity funds investor with commitments of over €2.7 billion to funds with capital of over €13.5 billion as of December 2009.