Resumen
AbstractThis paper examines the syndication behaviour of South African private equity and venture capital firms. Three possible rationales for syndication are tested: risk reduction through portfolio diversification (finance rationale), accessing the skills of other firms (resource-based rationale) and improved access to future investment opportunities (deal flow rationale). The finance-based rationale and deal flow rationales are found to be more important than the resource-based rationale. A number of firms additionally list Black Economic Empowerment (BEE) as an additional important reason for syndication. The reasons for syndication behaviour did not vary when small and large firms were considered separately. While firms taking part in start-up investments were more likely to syndicate, their reasons for doing so were not different from those who invest later in the investment life-cycle.While there is currently a low level of syndication of private equity investments in South Africa compared to Europe and the US, most SA firms regard syndication as beneficial and are more likely to syndicate in the future.