EM PE Quarterly Review – Volume VII, Issue 1

in this issue


The Varied Approaches to Risk in Private Equity (Expert Commentary by AlpInvest Partners)

Better than Her Reputation? A Closer Look at Russia’s Private Equity Landscape

Impact Assessment of the Recent Events in Tunisia (Expert Commentary by TunInvest-AfricInvest Group)

Inside Perspectives: An Interview with OPIC’s Jay L. Koh

Industry Data

EMPEA Industry Statistics

EM PE Performance

Notable Exits & IPOs

viewpoint from EMPEA president and ceo sarah alexander

Just as the gloom of the global financial crisis was finally receding, the recent events in Japan, the Middle East and North Africa remind us yet again that risks are not always predictable or quantifiable. Nevertheless, in an increasingly complex, cross-border industry, risk assessment and mitigation strategies are critical, particularly for investors in long-term, illiquid assets across emerging and frontier economies.

We have devoted this issue therefore to examining various dimensions of risk, including how fund managers in North Africa and Russia assess and manage risk in their markets, and the ways in which LPs can mitigate against heightened political, currency and inflation risks.

First-person accounts, such as the one shared here by the team at TunInvest-AfricInvest Group, of the portfolio impacts of political upheaval and regime change in Tunisia illustrate how different types of companies fare during turbulent times. In Tunisia at least, the crisis is expected to yield necessary reforms that bode well for private equity’s long-term prospects in North Africa.

Russia continues to be plagued by perceptions of high-stakes political risk, leading to its fall from investor favor in recent years. EMPEA’s members close to the action in Russia, however, tell a different story. We take a closer look at the bigger picture positives and negatives of investing there in an attempt to introduce some facts into the debate over whether Russia deserves its place in the “BRIC” investing thesis.

Although political risk is front and center for the moment, AlpInvest’s Peter Cornelius reminds us that LPs face a host of other risk factors, particularly inflation and currency risks that are growing in importance as both LPs and GPs increasingly transact across borders, and he provides a roadmap for how LPs can think about mitigating these risks.

Finally, in our interview with Jay L. Koh, newly-appointed Head of Investment Funds for the U.S. development finance institution OPIC, we look at how one institution is seeking to use information and innovative products to mitigate specific developing market risks for investors.

Despite our focus on risk, we would be negligent not to continue to tell the positive stories of PE investments.  Here we feature our latest installments in the Emerging Markets Private Equity Impact Case Study series: Olam International, a Singapore-based agricultural and commodities trading firm that was shepherded to a successful IPO by AIF Capital, and Manipal, a leading Indian private education company that, with the backing of IDFC PE, expanded into a global platform with 220,000 students worldwide.

We look forward to hearing more about the successes and challenges facing investors in emerging markets at our upcoming annual events in Washington, DC. We hope you’ll join us for the Members Reception the evening of May 9, followed by the 13th Annual Global Private Equity Conference on May 10-11.