Private equity (PE) firms are facing increasing pressure from their investors to consider environmental, social and governance (ESG) factors in their investment processes. Few studies have been performed on ESG issues, which confine the understanding of ESG profiles to very few countries. For this reason there is a need to better understand whether responsible investing (RI) practices are restricted to certain countries or whether the drivers and maturation differ between PE markets. This paper investigates the extent to which PE firms incorporate ESG into their investment processes, focussing on the Namibian PE industry. This study was a qualitative study using data collected via 17 semi-structured interviews. These interviews included ten PE firms, three limited partners, two portfolio companies, the Namibian Financial Institutions Supervisory Authority and the economic policy advisory services department within the Ministry of Finance. Computer-assisted qualitative data analysis software was used to process the data. Thematic coded analysis was performed on the data, and relationships were defined in accordance with the categorisation of themes.
The research found that while the Namibian PE industry does consider ESG factors within their investment practice, the integration of ESG factors in investment processes are somewhat limited. The Namibian PE industry is regulated, though ESG is not specifically addressed in the regulatory framework. Furthermore the drivers of and motivation for ESG differ between developed and developing markets, and limited partner education on ESG is needed to promote the integration of ESG factors in the PE industry.
Mini Dissertation (MBA)--University of Pretoria, 2017.