Factors Influencing Private Equity Investments in Asian Countries

Abstract

An overview of investment activities of the Asian private equity market is presented in this paper. The study began with a close examination of the movements in the Asian private equity market over the last few years and a comparison of Asian and other developed nations' private equity investing practices. The observation gave rise to a hypothesis that Asian and Western economies may not be directly comparable in terms of their influencing factors. As a result, investigating the variables impacting private equity investments in Asian economies has become the primary research question. The private investment activity of five Asian economies—China, Japan, South Korea, Singapore, and India—between 2010 and 2023 was examined in this study. The total private equity investment value across all five Asian economies' sectors was used to gauge the level of investment activity. The study was based on about three major dimensions: the investment environment, economic conditions and research & development. Eight explanatory variables, including GDP, inflation, interest rates, stock market capitalization, research and development expenditure as a percentage of GDP, and the Intellectual Property Rights Index (IPRI), were included in the dataset. The correlation study between each of the eight variables has been performed before more in-depth analysis. The study was conducted using the regression analysis approach. The analysis identified that IPO, GDP and Research & Development (R&D) have a strong and significant impact on private equity investments, being significant drivers in attracting investments. The inflation has shown least influence on private equity investments. The IPRI index, stock market capitalization and liquidation showed no influence on the private equity investments. Lastly the results are subjected to limited data available about the factors. Keywords: Asian economies, Private equity, Investments