Measuring the job creation effects of IFC-supported private equity funds

Using data from IFC's Development Outcome Tracking System, the study shows a strong job growth for companies financed through IFC-supported private equity funds. The nearly 500 companies covered in this analysis, in which the private equity funds had invested about $4.0 billion, and about 10 percent of the financing came from IFC, created nearly 300,000 jobs between 2000 and 2010. While most jobs are created by larger companies, the study shows that job growth rates are higher for smaller companies. Though job growth rates were higher for smaller companies, most jobs were created by larger companies. Job creation was also strongly and positively correlated with the returns of the funds, showing that good financial performance did not come from cutting jobs, but from expanding companies-their valuations, revenues, and jobs. The best job creation occurred when fund managers worked with companies with which they were familiar. Private equity activity has created jobs. This segment of the portfolio reaches into many countries, regions, and industries. For strong job creation, both investments in smaller companies (that enjoyed higher job growth rates) and subsequently in expansion-stage companies, probably in services or a customer-facing operation were important.