No other country will be able to challenge the US “for the foreseeable future” as the most attractive environment for private equity investment, according to the 2015 Venture Capital and Private Equity Country Attractiveness Index compiled by the IESE Business School.
The research ranked countries on six key drivers: economic activity, depth of capital markets, taxation, investor protections and corporate governance, human and social environment, and entrepreneurial opportunities.
The US placed first, followed by the UK, which climbed two places over the past five years, returning to a pre-crisis level of attractiveness on the basis of a strong expected GDP and improved entrepreneurial opportunities, the report said.
Canada ranked third, followed by Singapore, that has dropped to fourth place over five years due to falling GDP growth, and Japan.
The biggest climbers in the top 20 over five years were New Zealand, which moved from 15th to ninth place, and Malaysia, which rose from 18th to 12th place, sandwiched between Sweden and Norway.
China placed at number 21 – above Taiwan at 24 – due to its economic growth, capital markets development and favourable taxation practices for entrepreneurs, the report said.
For the other BRICS countries, India ranked at 29, the Russia Federation at 39 and Brazil at 41. South Africa ranked highest in Sub-Saharan Africa at 37.
However, the report noted that “investors meanwhile look beyond the BRICS and search for new emerging and frontier markets for allocations” to countries with large populations and “economic catch-up potential”. These include Mexico at 40, Indonesia at 44, the Philippines at 42, Nigeria at 82 and Turkey at 31.
In Africa, South Africa was trailed by Zambia at 52. Burundi placed last in the overall list at 120.
Israel was the most attractive Middle Eastern country for PE, placing at number 20, followed by Saudi Arabia at 26, which ranked one place above Spain.
The US has topped the ranking since the survey was launched six years ago.