Data & Intelligence

Taking Stock of 2012 and the Prospects for EM PE in 2013

As 2012 came to a close, EMPEA reached out to a number of the industry’s leading practitioners to solicit their reflections on the year gone by, and to glean insights on the prospects for emerging markets private equity in the year ahead.

The Global Firms’ Views

Paul Fletcher, Senior Partner, Actis

2012 was an encouraging year for EM PE, with most investment themes continuing to show resilience. It was also reassuring to witness some of the political and economic risks, namely instability in Egypt and the much feared Chinese hard landing, playing out better than we hoped. We expect to see more and more large financial buyers hungry to acquire EM PE mid-market investments. We feel quietly optimistic about India, providing the government’s policy reforms take hold. As ever for Actis, Africa remains an appealing capital destination with significant demand for infrastructure, and high quality products and services. In October 2012, Actis closed Sub-Saharan Africa’s largest private equity real estate fund and we expect intense activity in this sector during the next 12 months. Currency continues to be a significant point for consideration. We saw a 5–10% discount on U.S. dollar returns because of volatility in South African, Indian and Brazilian currency. It’s a reminder to all of us to be mindful of managing this risk.

Arif Naqvi, Founder & Group CEO, The Abraaj Group

2012 was, in my view, a year that consolidated the growth areas of our global economy. Investors and GPs are recognizing that the opportunity lies in what we at Abraaj call the ‘global growth markets.’ From Latin America through Africa to Southeast Asia, we can see the strengthening of the South-South economic corridor, where private equity is increasingly recognized as an important source to finance the growth that will occur as a result of these emerging dynamics. Look at Africa as an example of this trend as of late: a number of new funds have been launched to target that vast continent. Seven of the 10 fastest growing economies in the world are in Africa— these are transformational shifts. I have said this before, and I continue to maintain that we are privileged to be living through these transformational times. On the macroeconomic front, the biggest megatrend by far is the pace of expansion in the growth markets being higher than that in the developed world. Many of these markets are characterized by a growing consumer class with increasing consumption power. This in turn is creating the need for infrastructure, health and education services, housing, logistics and transportation. Private equity has an role to play across the board in this exciting landscape. The main issue of concern will be how private equity creates long-term value and builds sustainable industries that will be equipped to succeed in the 21st century. This will entail robust governance and risk management systems, environmental and social strategies that are measurable and impactful, and an engagement model between the GP and LP that is founded on trust. Private equity can be a tremendous force for development; a catalyst for change through infrastructure development and employment as well as innovation. Indeed, I am convinced that private equity in the markets in which we operate belongs to Main Street and not Wall Street.

EMPEA represents the leading global investors in EM. I look forward to working alongside to drive much-needed capital for financing entrepreneurs and businesses worldwide.

Renuka Ramnath | Founder, Managing Director & Chief Executive Officer, Multiples Alternate Asset Management Private Limited

EMPEA plays an important and energetic role across the markets it represents, driving outreach and research initiatives, and promoting the role of private capital.

Brian Lim | Partner and Head of Asia and Emerging Markets, Pantheon Ventures

The developed markets have no equivalent to the role EMPEA is playing as a convener and source of trusted information in the emerging markets.

David Rubenstein | Co-Founder and Co-Executive Chairman, The Carlyle Group

I’m honored to join fellow industry pioneers in the leadership of an unparalleled network, filled with first movers, shaping the future of industries and communities.

Dr. Andrew Kuper | Founder and CEO, LeapFrog Investments

EMPEA's market and industry intelligence opens doors to new sources of capital.  I look forward to the future success of EMPEA and its members.

Torbjorn Caesar | Senior Partner, Actis

While there are certainly challenges for the industry, the opportunities abound in our target markets and globally, making a global association like EMPEA more relevant than ever.

Drew Guff | Managing Director & Founding Partner, Siguler Guff & Company