EM PE Quarterly Review – Volume VI, Issue 1

In this Issue


The ILPA Principles: How Will They Shape LP-GP Relationships in Emerging Markets?

2009 Emerging Markets Private Equity Fundraising and Investment

News and Data

Funds Launched & Closed

EM PE Performance

Notable EM PE Exits & IPOs


2010 promises to be an improvement over the challenging year behind us, but we are not out of the woods yet. Limited partner capital is slowly returning to market, and portfolio performance is trending upward. But new issues, particularly potential regulation and LP-GP terms, will likely dominate, and complicate, much of the discussion in our industry this year.

Fundraising will remain quite challenging because LPs will remain cash constrained until exits from their Western buyout portfolios resume. Additionally, pending regulation in Europe, if enacted in its current form, would seriously impair the ability of non-EU GPs to raise capital from EU investors.

In early March, EMPEA issued a letter to the Spanish Presidency of the European Union (reprinted in this issue) articulating concerns about the “third country” provisions of the proposed EU Alternative Investment Fund Manager (“AIFM”) Directive. These provisions would deter EU investors from investing outside the EU. EMPEA’s letters joined a chorus of objections from ILPA, EVCA, the BVCA, and the US Treasury Secretary, along with a host of others. EMPEA continues to voice its concerns as the debate over the final AIFM Directive terms work their way through the European policymaking process.

EMPEA has always been an advocate of strong LP-GP relations, as they serve the interests of the entire industry. Today’s fundraising environment will be characterized by some of the most robust dialogue between LPs and GPs to date, encapsulated by the ILPA Principles released in 2009. EMPEA has been working closely with ILPA and development finance institutions to facilitate a dialogue on the significance of the principles for our members. Our efforts include a webcast that drew over 160 participants, a summary of which you’ll find in this issue.

As LP funding does come back to the market, it’s more important than ever to demonstrate the return potential of the asset class. As one of the largest investors in emerging markets private equity, the International Finance Corporation (IFC) is in a position to judge return potential across developing countries. Drawing on nearly two decades of experience, the IFC’s David Wilton shares the IFC’s track record, and challenges some fundamental assumptions about the risks and opportunities within emerging markets PE.

We will be sharing updates on these and other critical issues facing the industry at the 12th Annual Global Private Equity Conference on May 11–12 at the Ritz Carlton in Washington, DC. I sincerely hope to see you there, if not earlier at the Members-only Reception the evening of May 10th.