EM PE Quarterly Review – Volume VII, Issue 2
In this issue
Viewpoint from EMPEA president and ceo Sarah alexander
Rising inflation, currency volatility, food security, and political upheavals—these are the current headlines for emerging markets. But we see few signs that these risks are stunting the continued growth of private equity in developing countries.
In the first half of 2011 alone, we’ve seen record-breaking funds raised for Latin America and Africa. Both veteran and first-time GPs are launching sizable new funds targeting not only Brazil, India and China, but also frontier markets. Investor bullishness on EM PE is not too surprising when one looks at performance—the latest statistics from Cambridge Associates show EM PE continues to outperform all other PE markets over a 1-, 3- and 5-year period.
As the industry demonstrates resilience and performance, new institutions are seeking information to better understand the opportunities, risks and rewards of exposure to EM PE. Educating institutional investors is therefore a key EMPEA priority. One of the highlights at this year’s IFC/EMPEA conference was a special oneday seminar for LPs, with more than 100 attendees, which included presentations on the asset class from Bain Consulting, Cambridge Associates and IFC, and discussions guided by sovereign funds and other experienced institutional investors.
Increasingly, LPs from emerging markets themselves are becoming active investors in EM PE—a phenomenon that we believe is a critical enabler to greater development of the asset class. In addition to our recently released report on Local Pension Capital in Latin America, we have been working with the U.K. Commonwealth Secretariat and several EMPEA members to provide educational seminars for Africa’s pension funds, insurance companies and regulatory bodies to discuss the opportunities and challenges of private equity investing. As local LPs and regulators become more comfortable with the mechanics of private equity, notable progress is being made in select markets, including South Africa, as J-P Fourie, Executive Officer of SAVCA, describes in these pages.
This issue’s Inside Perspectives features an interview with Robert Thorpe, Managing Director of Macquarie Infrastructure and Real Assets, where we explore what it means to be an infrastructure PE investor in the emerging markets. Robert explains how regulatory and political risk can actually be less of an operational challenge for infrastructure investing in emerging markets than in more developed ones.
As we look ahead, it is also a good time to reflect back. Roger S. Leeds, one of EMPEA’s key founders and outgoing Chairman of the Board, shares his perspective on how EM PE has transformed itself in a short period of time from a discredited asset class to one that has proven it can deliver strong returns, while also promoting greater economic development.
Demonstrating impact in addition to financial returns is critical to educating key stakeholders in developing economies about the benefits of a legal and regulatory system that encourages PE investing. We hope you will join us as we explore this theme of the impact of long-term investment in greater detail at theinaugural EMPEA/Financial Times Business Capital Impact conference in Londonon 17–18 October.