EM PE Review – Volume VI, Issue 4

In this issue


Exit via IPO in China (Ergo Study Excerpt)

Inside Perspectives: An Interview with Baring Private Equity Asia’s Jean Eric Salata

Regulatory Update (AIFM Directive)

The Impact of the Dodd-Frank Act on Investment Adviser Registration in the U.S.

Industry Data

EMPEA Industry Statistics

Funds Launched & Closed

Notable Exits & IPOs

Viewpoint from EMPEA president and CEO Sarah Alexander

Reflecting on the last 12 months, 2010 will be remembered as the year investors decided they not only had to be in Asia, but that they also needed to look beyond the emerging markets of China and India to find alpha. This preoccupation arose from the comparative unattractiveness of deals in the U.S. and Europe but has been accelerated by the introduction of new regulations in Europe that increase the cost of doing business.

This final 2010 issue of the Quarterly Review focuses on two themes evocative of the year behind us: 1) the promise and challenges of investing in Asia, particularly China, which still tops LPs’ wish lists; and, 2) the need for articulating PE’s positive economic impact, to deter the costly regulatory change sweeping developed markets from migrating to developing markets.

As a domestic PE industry in the making, China’s approach to PE is instructive for other emerging markets growing their own local industries. This issue explores emerging frameworks for local currency fund formation in China, as well as the growing trend toward exits via onshore listings. In an update of their 2009 article, Weil, Gotshal & Manges LLP Partners John Fadely and Kevin Ban and KPMG’s John Gu share their insights into the complex and ever-evolving regulatory framework for China’s local currency PE funds. EMPEA member Ergo Consulting assesses the outlook for PE-backed IPOs in China, and Baring Private Equity Asia’s Jean Eric Salata underscores the vast opportunity that China presents, highlighting the opacity of the market as working in favor of investors already established there.

These pages also feature some of EMPEA’s efforts to educate key political and regulatory constituencies about PE’s positive impact, particularly in response to regulatory actions with potentially stifling effects on investment in emerging markets. EMPEA’s submission to the U.K. Parliamentary inquiry into the future of CDC asserts the importance and relevance of the PE funds model for achieving development goals. In a letter to the editor of the FT, we stress the need for fair treatment for EM managers under the new EU regulatory framework. Our fifth installment in the Private Equity Impact Case Study Series and our first for Latin America showcases Unnafibras, an innovative Brazilian textile manufacturer-turned-plastics recycler backed by EMPEA member Stratus.

We’ll be delving further into the opportunities and challenges of investing in Emerging Asia on January 19th, when we join forces with the Hong Kong Venture Capital Association for the Asia Private Equity Forum. And as always, we hope you’ll join us in Washington for the 2011 Global Private Equity Conference on May 10–11. Until then, we wish you and your families a peaceful and prosperous year to come.