Private equity is becoming an increasingly important sector globally, particularly in the United States and Europe, but also in emerging markets. In fact, the past year was a remarkable one for emerging markets private equity: fundraising for the asset class tripled, driven largely by a strong rise in exits and cash returned to international investors. The numbers were up for all regions.
Perhaps even more telling, the picture that is taking shape today is fundamentally different from before: private equity in emerging markets is no longer considered an exotic asset class. Private equity professionals are breaking down the borders of investing, recognizing that globalization is transforming the private equity business.
IFC's unique role in the sector
Over the past 20 years, IFC's experience has shown that there is a strong relationship between fund performance and development impact, and that the quality of the fund manager is the main driver of performance. Consequently, IFC's current investment strategy for funds has a strong focus on experienced teams with a proven good track record. It also seeks managers who add commercial value to the companies in which they invest, rather than just supplying capital.
IFC's role typically includes:
- Acting as a catalyst for mobilizing institutional capital;
- Supporting experienced fund managers who can implement value-added strategies;
- Working with fund managers on corporate governance and sustainability at the fund and company levels; and
- Enhancing the transparency and accessibility of emerging market funds to commercial investors.
In recent years, IFC has worked to make emerging market private equity more visible to investors. Initiatives have included creating a benchmark for emerging market private equity, sponsoring the creation of
EMPEA (the Emerging Markets Private Equity Association), and holding the
Annual Global Private Equity Conference that is now the premier event for investors in the sector.
