PE and VC Investing in Emerging Markets

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The Emerging Markets Private Equity Assocation (EMPEA)'s fact sheet on PE and VC Investing in Emerging Markets reveals the benefits of seeking Private Equity Funding.

Summary:

Private equity offers companies in emerging markets crucial access to smart, patient capital that fuels growth and enables persistent improvements in performance.

Since 2005, private equity firms have invested more than US$108 billion in companies in emerging markets, ranging from small entrepreneurial enterprises to mature companies seeking capital to expand operations or market reach. While similar to the model in North America and Europe, the particularly additive role that private equity plays in emerging markets showcases the benefits the asset class can bring to both companies and economies.

In many countries with underdeveloped financial markets, private equity is the sole source of capital available to enterprises to grow their businesses—debt or public equity generally being otherwise unavailable or prohibitively expensive. In addition to filling a crucial financing gap, private equity investors also provide long‐ term stewardship that enables companies to achieve their strategic goals and build value—from guiding a growing company’s national or international expansion plans, or turning around a poorly performing firm by focusing on operational or governance improvements, to preparing a company for a public listing.

1.    Private equity fills a crucial financing gap by providing companies in emerging markets with access to growth capital otherwise unavailable.

2.    Private equity investment entails long‐term stewardship of the company, often evolving to an advisory role or partnership that survives long after the investor has exited the investment.

3.    Private equity firms offer more than mere capital; PE investors advise company management on goal setting and strategic and operational decision‐making—leveraging sector expertise and deep networks—and guide implementation of enhanced corporate governance.

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