De-Risking Emerging Market PE Investments: A Checklist for Investors

In addition to ordinary commercial risks, emerging market private equity (EMPE) investments are subject to those risks that arise across virtually all emerging markets: unenforceability of contracts, expropriation, discrimination against foreign investors, weak or corrupt local courts, corrupt government officials and regulators, poorly drafted or conflicting laws and regulations, and inefficient or inequitable tax regimes. It is not unusual for local partners to use home country weaknesses to disenfranchise PE investors or steal assets. However, these risks can be mitigated or avoided entirely, through structural arrangements or specific deal terms.