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International allocation determinants of institutional investments in venture capital and private equity limited partnerships

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Author Info

  • Groh, Alexander P.

    (Montpellier Business School)

  • Liechtenstein, Heinrich

    ()
    (IESE Business School)

  • Canela, Miguel A.

    (University of Barcelona)

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    Abstract

    We examine the determinants of institutional investors when deciding on international capital allocation in Venture Capital and Private Equity Limited Partnerships; this is done through a questionnaire addressed to (potential) Limited Partners world-wide. The respondents provide information about their criteria for international asset allocation. The protection of property rights is the dominant concern, followed by the need to find local quality General Partners, and the quality of management and skills of local entrepreneurs. Furthermore, the expected deal flow plays an important role in the allocation process, while investors fear bribery and corruption. Public funding and subsidies do not play a role at all in the international allocation process. Hence, private money does not follow public money. The IPO activity and the size of local public equity markets are not as relevant as proposed by other researchers. Our results can support policymakers to increase the attractiveness of their countries for institutional investors and, thus, to receive more risk capital for innovation, entrepreneurship, employment and growth.

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    Bibliographic Info

    Paper provided by IESE Business School in its series IESE Research Papers with number D/726.

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    Length: 31 pages
    Date of creation: 11 Jan 2008
    Date of revision:
    Handle: RePEc:ebg:iesewp:d-0726

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    Postal: IESE Business School, Av Pearson 21, 08034 Barcelona, SPAIN
    Web page: http://www.iese.edu/
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    Related research

    Keywords: Venture Capital; Private Equity; International Asset Allocation; Institutional Investors;

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    Cited by:
    1. Groh, Alexander Peter & von Liechtenstein, Heinrich, 2009. "How attractive is central Eastern Europe for risk capital investors?," Journal of International Money and Finance, Elsevier, vol. 28(4), pages 625-647, June.

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