2017 EMPEA Annual Report
Download the 2017 Annual Report here.
Letter from the CEO and Chairman of the Board
At the time EMPEA was founded in 2004, private capital in emerging markets was a nascent asset class. That year, a modest US$6.6 billion was raised for emerging market (EM) private equity and industry stakeholders were worried about the poor performance of many first-generation funds. Data were hard to come by and uncertainty abound.
Fast forward more than a decade later and we see a vastly different picture.
Many in our industry would agree that over this period, EMPEA has made a major contribution toward rendering emerging markets private capital an established and respectable asset class, worthy of institutional investor allocations. 2016 saw almost US$50 billion raised for EM private capital funds, another US$31 billion invested into its companies, and a total of US$568 billion raised since EMPEA’s founding.
We’ve seen the evolution of a wide range of geographic and sector specific funds that attests to the deep and ever growing expertise developed on the part of EM general partners (GPs), as well as increased interest on behalf of limited partners (LPs) to invest in nuanced strategies. Most recently, impact investing and sustainable investing have gained ground and sizable investments have entered frontier
countries once deemed inconceivable as investment destinations.
The next phase of the industry’s maturation is now taking shape. Industries rarely evolve without dislocations. Increased LP interest in taking on more co-investments, direct investments and separate accounts is beginning to influence fund managers’ future strategies, business models and investment mindset. In fact, 52% of the LPs surveyed in EMPEA’s 2017 Global Limited Partners Survey expect to increase their co-investment activities over the next two years, while 35% anticipate increasing their direct investments. The traditional GP/LP model of investing is no longer the only framework for building investment processes with the consolidation of large LPs’ capital across fewer managers, the resulting bifurcation of GPs as well as the host of innovative investment models adopted by fund managers to address new LP interest from permanent capital to deal by deal investment models.
The rise of alternative strategies outside of private equity, such as private credit, infrastructure, real assets and venture capital prompted EMPEA in 2015, to include them in its research and data coverage. Today, we continue to track industry trends and are making note of the emergence of more hybrid vehicles as many fund managers are providing credit, as well as equity solutions. In the coming years, EMPEA will consider further expansion of its research and data to include additional alternative investment vehicles such as real estate, fund of funds, secondaries, direct and co-investments, so as to be as conclusively representative of the emerging markets private capital asset class as possible. As we continue to evolve along with this creative and growing asset class, we will keep providing a platform that allows our diverse international investment community to convene, connect and engage in dialogue and debate, as well as share best practices and on-the-ground insights.
EMPEA, throughout its thirteen-year history, has served as a resource for fund managers, institutional investors and other industry stakeholders, helping to provide a global perspective on the industry and added transparency by way of data and research. As the asset class matures and evolves, we will continue to provide industry intelligence and insights to our members. The recent establishment of the EMPEA Institute, to be funded by grants and tax-deductible donations, will help us push our research agenda even further and allow us to develop new, innovative content and educational platforms beyond what has been possible via the membership association model. As the Institute works toward establishing its initial impact on the asset class, we welcome members’ input and perspective on the types of initiatives and insights you think would be most relevant in our ever changing markets.
The organization’s global activities and market perspectives over the past year are highlighted in this report. We do hope that the examples mentioned here will encourage you to become a more active participant in EMPEA as well as prompt you to try something new from the membership. Thank you all for your time, intellectual contributions and financial support, all of which allow us as an organization to continue to flourish.
Robert Petty, Chairman of the Board, EMPEA and Managing Partner & Co-Founder, Clearwater Capital Partners
Robert W. van Zwieten, President & CEO, EMPEA
Download the 2017 Annual Report here.