IRELAND HAS dropped out of the top-20 most attractive global countries for venture capital and private equity investment, according to a new report published yesterday.
The Global Venture Capital and Private Equity Country Attractiveness Index, undertaken by the IESE Business School in collaboration with Ernst Young, places Ireland in 21st position, down from 16th place a year ago.
The US topped the list of 66 countries followed by Canada, Britain, Australia and Hong Kong.
The index is based on six key criteria investors cite as most important to them: economic activity; the depth of capital markets; taxation; investor protection and corporate governance; the human and social environment; and entrepreneurial culture and opportunities.
“Today’s top-10 list are all countries perceived internationally on the road to economic recovery. For example, Australia would not have a strong history as an attractive location for this type of investment; however, its relative stability in the international turmoil has attracted many risk-averse investors,” said John O’Halloran, transactions director at Ernst Young.
In its analysis of why Ireland is viewed as a less attractive location than in previous years, the report cites poor access to credit and a low risk-appetite for investors. It also says the predominance of the retail, leisure and construction sectors is a factor in making Ireland unsuitable for investment.
In addition, the study lists threats to Ireland’s recovery of international attractiveness. These include the depth of the Irish recession in comparison to other countries, the increase in company failures, and the fall-off of mergers and acquisitions.
While critical, the analysis does highlight some opportunities that would enable Ireland to recover lost ground within the international investor community.
The Government’s emphasis on promoting high-potential and “smart economy” businesses, strong medical device and pharmaceutical sectors, and a drop in valuations, are all cited as beneficial. The study – based on data for nine years – reveals China, Poland and India have taken strides over the last five years in boosting appeal to investors. Countries that have slid include Kuwait, Latvia and Oman.
