See Highlights from GPEC 2019

Enjoy the GPEC 2019 Opening Video

GPEC 2019 in Review

Welcome Keynote

“There’s a need for investors and fund managers to agree on a common set of principles to invest in the impact investing space. For the first time we have a common set of standards.” Newly appointed President of the World Bank Group, David R. Malpass, opened the first day of GPEC with a review of the Bank’s current work and objectives, including applauding the IFC’s recently released Operating Principles for Impact Management (the Principles) for consolidating the standards for impact in the market. Malpass also emphasized the importance of debt transparency in obtaining capital and building emerging economies. Building up transparency is a major mission for the World Bank going forward. He cited his travels to Mozambique and lessons learned there as the country is still recovering from its debt disclosure crisis. Globally, the World Bank is increasing the country-level focus of its programs, with plans to accelerate the decentralization of the Bank’s work to the relevant country offices as part of this process.
Middle Market Breakfast: A Favorable Landscape

Data from EMPEA, presented by Kevin Horvath, showed that the middle market represents a favorable competitive landscape for investors, with fewer GPs raising capital for the segment than in the past and relatively low entry valuations in markets outside of Asia. Panelists Mario Spinola of Principia Capital Partners and Thomas Barry of Zephyr Management commented on the negative impact of consolidation in the EM PE market, as established international LPs increasingly write larger checks to larger, more established fund managers. Local LPs, and family offices, in particular, have often filled the gap left by global investors. The panelists also discussed both control and minority transactions, the importance of investing with an eye on exits, and concerns over growing investor preference for co-investments.
Keynote Address: How Devolution of Power Can Drive Prosperity

Raghuram Rajan of the Booth School of Business at the University of Chicago, Former Governor of the Reserve Bank of India and author of The Third Pillar: How Markets and the State Leave the Community Behind spoke about increasing valuations in emerging markets by attending to the details. Business inefficiencies include specific circumstances at the company-level from inconsistent ingredients being used across franchise stores to corporate executives mistreating employees. If one is committed to exerting a significant amount of effort, engagement, and time into a small number of transactions, then there is an opportunity for fantastic returns. Disruptive trends can happen much quicker in emerging markets, so finding the assets and creating structures that reduce risks are key. Dr. Rajan advocated for having majority control in portfolio companies because of the volatility in emerging markets and the advantage of dictating the timeline and exit strategy.
Keynote Interview: The Case for Emerging Markets

William Ford of General Atlantic explained in an interview with Henny Sender of the Financial Times that he is increasing his exposure to emerging markets as positive macro factors such as more stable inflation rates and better governance arise. Specifically, he noted the promise of healthy entrepreneurship and the flourishing technology sector in India, China, and Latin America. As network data rates decrease and mobile penetration increases, opportunities are expanding in these markets. Innovative business models will become the next global norm given how many users have quickly adapted to these systems, such as Alipay. Today, more firms come from China and are exported globally as local talent becomes highly qualified. General Atlantic has found the best opportunities in mission-driven companies in sectors such as education, supplemental services, and health care. That said, emerging markets will have more volatile business environments, so it is essential to find entrepreneurs who can work through these challenges. Security, corruption, macroeconomic stability, currency volatility, mismanagement, and rule of law are factors that must be heavily evaluated in order to protect investments. General Atlantic had been bullish on Turkey, but recent events around the elections have led to a pullback. M&A still represents approximately 60% of the transactions that General Atlantic executes. When the exit strategy is to list on public markets, Nasdaq remains the most attractive exchange, though the HKEx’s new rules and regulations are drawing more and more companies there.
Roundtable: Geopolitics and the Global Economy

In emerging markets, external forces—political, financial, and technological—have the potential to influence investment outcomes. Lawrence Brainard of TS Lombard, Rachel Ziemba of Center for a New American Security (CNAS), and Michael Warren of District of Columbia Retirement Board and Albright Stonebridge Group shared their thoughts with moderator Maggie Lake of CNN International on key variables in the global geopolitical and economic environment with the potential to impact emerging markets. US-China trade discussions have dominated news headlines, and the panel noted that continued friction could lead to realignment of global trade and investment flows, with Southeast Asia potentially in a position to benefit. Concerning the impact of technology on global economic activity, the panel cautioned against looking at developments in one region or country and mapping to other jurisdictions. Local ecosystems, infrastructure, and supply chains have to be taken into account. Many corporate boards are spending time preparing for the uncertain road ahead, in which central banks may have fewer options to sustain growth. The panel advised that investors should consider how they can quickly adjust to an abrupt change in the global financial landscape.
Leaders Panel – What is Next for Emerging Markets? PE and VC Leaders Discuss the State of the Global Private Equity Industry and Emerging Markets Private Capital Outlook

Eric Jones of OPIC began the panel by detailing his organization’s transformation into the new United States development finance institution (US DFI) in the coming months, which will allow the US to play an even greater role in fostering private capital growth across emerging markets. The panelists, Robert Petty of Clearwater Funds and Fiera Capital, TC Meenakshi Sundaram (TCM) of Chiratae Ventures, and Ziad Oueslati of AfricInvest, then discussed with moderator Hazel Bradford of Pensions & Investments, the most significant trends in their markets, which such as the growth of private capital, the need for portfolio diversification through EM investments, and as LPs’ desire for impact alongside financial returns. The discussion then shifted to the factors contributing to the greatest opportunities in developing economies, including positive demographic trends and strong growth. India was highlighted as an example of a market with attractive demographic factors for investment as the world’s second-largest population of internet users, with some of the lowest data rates globally. Panelists agreed that the perception of EMs among LPs and institutional hurdles to investment in these markets are among the biggest challenges they face. Nevertheless, innovation across asset classes, strategies, and sectors will continue to propel the private capital industry forward, and in some cases ahead of its developed market peers.
Keynote Conversation: Releasing USD150 Trillion of Blocked Assets in Emerging Markets

Erik Bethel of the World Bank Group interviewed Hernando de Soto of the Institute for Liberty and Democracy on ways to employ blockchain technology to access more than USD150 trillion in locked assets in emerging markets. Using the example of mining assets in Peru, where local communities are not benefitting from corporate exploration of the resources for which they have long been the custodians, de Soto elaborated on how tokenization of the profits from such businesses can empower and strengthen local economies in a sustainable manner. Engaging the local communities as partners would then reduce conflicts and challenges preventing capital from flowing into these markets. Investors looking for untapped opportunities in EMs with high growth potential may do well to explore how technology-enabled solutions may provide the means to access these opportunities in a manner that mitigates political upheavals and have a positive impact on local economies.
Panel Discussion: How Investors Can Bring Greater Transparency, Credibility, and Discipline to the Impact Investing Market

In a keynote discussion about the private equity community’s current approach to impact, Philippe Le Houérou noted that the IFC has always had three bottom lines for its investments – profit, impact, and additionality. The IFC aims to encourage the growing impact investing community to achieve similar standards with its new Principles. Le Houérou’s remarks were then followed by a panel of experienced emerging market investors, including Afsaneh Beschloss of RockCreek, Andy Kuper of Leapfrog Investments, Jennifer Pryce of Calvert Impact Capital, Rekha Unnithan of Nuveen, and moderated by Homi Kharas of Global Economy and Development, Brookings. The panelists agreed on the increasing acceptance and adoption of impact standards by firms, particularly the Principles, but noted the difficulties that emerge from the diverse interpretations of impact on the LP side and the possibility of ‘impact-washing.’ LPs do have specific impact objectives, but impact is still relatively new in private equity, so their understanding and positioning are still evolving. Hence, it is not always made clear to GPs upfront what LPs are looking for in terms of impact. The panel offered that a GP-led definition process and consensus in the industry should help create clarity for investors. The implementation of the Principles as a minimum standard of measurement should allay these concerns and improve the quality of impact reporting over all. The panel noted, delivering on impact as a firm is a matter of stating and quantifying what your positive impact will be upfront and following through with tracking and reporting on these metrics. For firms interested in impact, but unsure where to start, adopting the Principles can provide valuable guidance and credibility among potential investors.
Plenary Panel: Value Creation and Exits

The panel comprised of Nimit Shah of Helios Investment Partners, Kerem Onursal of Turkven, Bruno Zaremba of Vinci Partners, and moderated by Roger Leeds of Johns Hopkins School of Advanced International Studies (SAIS), expressed that the most difficult part of value creation in emerging markets is going into the details and tending to the small points. Business inefficiencies could stretch from an inconsistent amount of ingredients being used across franchise stores to corporate executives mistreating employees. If one is committed to putting in a significant amount of effort, engagement, and time into a small number of transactions, then there is an opportunity for fantastic returns. Disruption can happen much more quickly in emerging markets; therefore, it is especially important to find assets and create structures that reduce risks. Having majority control in the portfolio companies is key, as volatility in emerging markets increases the need to dictate the investment timeline and exit strategy.
Plenary Panel: What Lies Ahead for Private Equity in Brazil

Following opening remarks by ABVCAP President and EMPEA Board Member Piero Minardi of Warburg Pincus, João Busin of TozziniFreire Advogados led a conversation about the current investment landscape for private capital in Brazil with Jorge Ahumada of Aqua Capital, Jaime Cardoso of Crescera Investimentos, Drew Guff of Siguler Guff, and Minardi. With the new Bolsonaro administration in progress, investor sentiment toward the country has improved significantly and private capital activity has increased. The panel noted Brazil is the only emerging market that has taken significant steps to tackle corruption at an institutional level. This change in historic patterns will have a meaningful impact on Brazil’s future. The panel also agreed that pension reform efforts currently in progress will be a crucial determinant in Brazil’s continued growth. Looking at market in the global context, trade tensions between the US and China may actually favor Brazil’s primary sector exports.
Turkey Luncheon: Addressing Successful Exits, Political Risk, and Investment Opportunity

Barış Öney of GlobalTurk Capital moderated a panel of veteran investors, including Bariş Gen of IFC, Erman Kalkandelen of Templeton Asset Management Ltd., and A Murat Özgen of İş Private Equity, who joined leaders of new presidential initiatives for investments, including Murat Ali Cengelci of the Presidency of the Republic of Turkey Finance Office and Zafer Sonmez of Turkiye Wealth Fund. While the panelists focused their discussion on the present and future prospects of private capital in Turkey, they started by noting the asset class long history in the country, with the first PE investments coming in the mid-1990s. IFC’s first investment in Turkey came even earlier in 1964, and its Istanbul office remains one of the largest IFC locations outside of Washington. Panelists noted that many of their portfolio companies were growing regardless of the real or perceived political and economic challenges in Turkey, particularly in the sectors of defense, tourism, and technology. Representatives from the newly-created Turkiye Wealth Fund and Finance Office of the Presidency of the Republic of Turkey also detailed their government’s efforts to promote private capital investment and coordinate private sector activity with the government’s priorities.
Investing Across Borders in ASEAN

The panel of experienced ASEAN investors, including Daniel Hoh of Proventeus Capital, Jeffrey Chi of Vickers Venture Partners, Chris Freund of Mekong Capital, and Ravi Thakran of L Catterton, was moderated by Ralph Keitel of IFC and discussed the need for a regional identity independent of China and positive signs of investor interest in the region from EMPEA’s recent Global Limited Partners Survey. Political risk was not seen by the panel as a big concern – consumption in the region will continue regardless of who is in power and opportunities will be found in the shifting geopolitical winds of the US-China relationship. One major challenge identified by the panel was the regional expansion of Southeast Asian companies. While firms originating in Singapore build in an expansion strategy out of necessity as their home market is not enough to sustain demand, firms originating elsewhere in the region often fail to prepare an adequate management strategy for navigating differing demographics, and cultural priorities. The panelists emphasized that it is not macro conditions that ultimately matter for private equity investors and companies, it is the micro issues that will determine value.
New Approaches to Long-term Investing in Africa

Africa investment experts, including Paul Boynton of Old Mutual Alternative Investments, Clarisa De Franco of CDC Group plc, Eric Kump of The Carlyle Group, Stuart MacKenzie of Ethos Private Equity, Coenraad Vrolijk of Allianz, and Jean-Philippe Syed of Development Partners International, reflected on their major takeaways from this past investment cycle on the continent. All agreed that it was key for investment teams to get involved in the value creation process as soon as possible by employing “impatient capital.” In response to the question of whether the 10 year fund life was inadequate to grow African businesses, the panel noted that in most cases, you can create the necessary value in the typical time allotted if you get started right away. They also agreed that, while none of them consider themselves ‘impact investors‘, investing in Africa was inherently impactful, albeit to varying extents. The session concluded with the panelists expressing their optimism concerning the future of private capital in Africa.
Private Capital in China: Navigating a Market in Transition

Most investors have already decided where China will fit into their asset allocations, according to a panel led by Tim Burroughs of Asian Venture Capital Journal (AVCJ) with Priscilla Lu of Deutsche Bank DWS Asset Management, Stuart Schonberger of CDH Investments, Rebecca Xu of Asia Alternatives, Judy Ye of YiMei, and Lin-Lin Zhou of Principle Capital. What’s left for investors to decide is how much more capital they want to commit and their preference between pan-Asia funds and single market funds. The panel noted a bifurcation in the Chinese fundraising landscape between larger funds and smaller funds, but for different factors. The larger fund space is under-funded, with only 30 to 40 viable fund manager options that can provide capital for companies with value-add strategies. For smaller funds in China, the market is crowded with thousands of competitors and immense activity. Trade tensions had negative impacts on public sentiment and some on valuations as well. Some portfolio companies have significantly benefitted from the trade war, as China seeks to create domestic services, products, and solutions. The panel agreed the opportunity today is different than it was 5 to 10 years ago, with significant value being created through consolidation. The new approach in China is for large companies to consolidate and, through the process, diversify their businesses or markets. China is experiencing a “growth buyout” evolution, in which control buyout deals are being executed, but are deriving most of the return from the capital infusion.
Central and Eastern Europe

The CEE panelists represented a broad spectrum of the private capital ecosystem in the region, with the perspectives of Colin Clark of The Rohatyn Group, Anne Fossemalle of EBRD, Krzysztof Kulig of Innova, Sever Totia of 3TS Capital Partners, and Marcin Wysocki of Avia Capital. The panel began by outlining the unique opportunity in CEE, which combines many of the positive demographic and macroeconomic trends found in other emerging markets, but with the added stability and accessibility of developed markets, the EU in particular. Large leveraged buyout investments from pan-European shops have given CEE a reputation for having expensive assets and few deals available, but, in fact, the companies below the target size for these firms are under-served by capital. This lack of competition represents an opportunity for those who have the capital and the experience to deploy it. Given the relatively small size of individual companies in CEE, the panelists also discussed strategies for expanding their companies to other countries in the region, as well as to Western Europe and the United States. The panel also noted the technology talent available in the region and the promising investment opportunity with software companies that earn some of their revenue from other markets.
India: Revival of Investments and Investor Returns?

Moderator Nishith Desai of Nishith Desai Associates began by polling the audience on their predictions on the Indian general election and future business-friendly reforms. The panel, comprised of Mukul Gulati of Zephyr Peacock Management India, Rishi Kapoor of Investcorp, Shilpa Kulkarni of Zodius and Ranjit Shah of Gaja Capital, discussed the ways that the private capital industry has expanded over the past decades in India. The asset class has moved away from purely private equity to a range of private capital activity spanning from venture capital to distressed debt. They also discussed the reasons the Indian middle market space is particularly attractive amidst increasing activity in the VC and large buyout space, which both builds the growth-stage pipeline and limits crowding in the middle market. The exit environment has also expanded, with strategic sales and sales to other financial sponsors an increasingly viable and lucrative means of exit.
Latin America: The Rise of Latin American Tech

Jennifer McLeod Petrini of IFC interviewed a diverse panel of technology investors in Latin America adopting strategies from early-stage venture capital to growth equity, including Francisco Alvarez-Demalde of Riverwood Capital Partners, Gonzalo Costa of NXTP Labs, Eduardo Michelsen-Delgado of Kandeo and Jorge Steffens of Oria Capital. The panel kicked off with an examination of Latin American technology startups and their role solving current structural inefficiencies in the region’s economies. The increasing adoption of financial technology carries the potential to transform local communities in Latin America by reaching populations that currently have no access to financial services. Entrepreneurs in Latin America often adapt solutions that have worked in other markets and implement them to solve unique local issues. The panel noted that even with the region’s technology ecosystem displaying rapid growth, it still faces a scarcity of available financing, providing an opportunity for private investors to step in.
Sir Paul Collier: The Future of Capitalism –Dissecting Contemporary Failures and Suggestions for Reform

Paul Collier of the University of Oxford explained the thesis of his newly released book, The Future of Capitalism: Facing the New Anxieties. Historically, he argued, businesses have intervened to correct when capitalism has been derailed. However, the most recent derailment, caused by a sudden reversal of the trend of the poorer getting richer and the lesser educated becoming more educated, has yet to be corrected. He implored the private sector to remember that it is its responsibility to pursue profit with a purpose and to do what the public sector cannot do alone: create jobs and repair capitalism.
Climate Change: Opportunities for Investors

As noted by panel moderator Daisy Streatfield, Investor Practices Programme Director at the Institutional Investors Group on Climate Change (IIGCC), the numbers for climate investments are staggering, and only growing – per IFC estimates, USD23T in these investments exists out to 2030. Speaking with Frederick Long of Olympus Capital and Dhanpal Jhaveri of Everstone Capital and EverSource Capital, the panel provided perspective from current climate-oriented investors with particular insight into India and China. Clean energy has been a vibrant sector for environmental investment, but both panelists see the most essential opportunities coming in the reverse supply chain of industries. Companies in this growing industry sector enable the recycling and repurposing of products for a new life cycle while avoiding the rising climate and financial costs of simply disposing used goods and making wholly new products. This sector will only grow in importance for both the environment and the economy.
Keynote Panel – LP Perspectives: What Drives Allocations?

Are the exceptions becoming the rule when it comes to investing in alternative assets in emerging markets? Prakash Mehta, Partner at Akin Gump Strauss Hauer & Feld LLP, led a discussion on the forces driving LP decision-making with a panel of experienced institutional investors, comprising Roberta Brzezinski of CDPQ, Andrea Kaufman of Prudential, Stephen Moseley of Alaska Permanent Fund Corporation, and Brad Thawley of UTIMCO. Alternatives have overtaken conventional assets like public equities as a priority for many institutions active in developing countries, and the lines between LP and GP, or passive and active participant, have blurred. Panelists have updated a number of approaches to deepen their relationships and achieve better risk-adjusted outcomes, such as co-investing, partnering with local pensions, and setting up separately managed accounts. Moreover, while the size of the institutions in question means they have to consider the quantum of capital deployed in each opportunity, many continue to prioritize smaller, more specialized GPs who can provide deep exposure to favored themes, such as health and financial inclusion.
Welcome Keynote

“There’s a need for investors and fund managers to agree on a common set of principles to invest in the impact investing space. For the first time we have a common set of standards.” Newly appointed President of the World Bank Group, David R. Malpass, opened the first day of GPEC with a review of the Bank’s current work and objectives, including applauding the IFC’s recently released Operating Principles for Impact Management (the Principles) for consolidating the standards for impact in the market. Malpass also emphasized the importance of debt transparency in obtaining capital and building emerging economies. Building up transparency is a major mission for the World Bank going forward. He cited his travels to Mozambique and lessons learned there as the country is still recovering from its debt disclosure crisis. Globally, the World Bank is increasing the country-level focus of its programs, with plans to accelerate the decentralization of the Bank’s work to the relevant country offices as part of this process.
Plenary Panel: Venture Capital In Emerging Markets –What Does The Future Hold?

Monica Brand Engel of Quona Capital, Xiaomin Mou of IFC, Cem Sertoğlu of Earlybird Venture Capital and Rahul Chowdhri of Stellaris Venture Partners looked to the future of venture capital in emerging markets from their experience with early stage investments. The panel saw investment possibilities in two types of companies: one in which business models proven successful in developed markets are adapted to fit emerging markets; and the other in which homegrown emerging market technology companies are innovating in new ways never before seen globally. It was not the underlying technologies, such as block chain, that they found most compelling, but rather the application of these technologies to serve unmet needs amongst an emerging consumer class. The panelists also all stressed the importance of developing relationships with other investors in the space, since VC, unlike the growth-stage segment of the asset class, is a syndicate game.
Moving Toward Gender Balance in Private Equity And Venture Capital

IFC shared a video on the findings of their recent report, Moving Toward Gender Balance in Private Equity and Venture Capital, which found that gender-balanced leadership leads to 10-20% higher returns for private equity and venture capital fund managers. IFC’s Shruti Chandrasekhar explained the study’s underlying methodology and expanded on the results. Joanne Yoo of Development Partners International then discussed the Private Equity Women Investor Network (PEWIN) and their initiative Project Pink Light, aimed at accelerating the progress of women-led funds in the asset class. Finally, Laura Kemp-Pedersen of Leapfrog Investments and Co-Head of EMPEA’s Gender Parity Acceleration Working Group discussed the group’s ongoing initiatives to create a toolkit for firms active in EM PE to promote gender diversity and inclusion. Kemp-Pedersen concluded that IFC’s report linking gender parity to financial imperatives would definitively make the case for these and similar initiatives in the industry.
Keynote Address

David Rubenstein began his keynote speech by describing the genesis of his talk show in Bloomberg, which came about after he realized his preference for interviewing other guests when speaking at conferences and events. Since he had no guest to interview this time, he continued his talk as if he was interviewing himself about current events. Beginning with the 2020 United States presidential election, Rubenstein noted that front-runner predictions this far out from presidential elections were nearly always wrong. However, President Trump’s reelection chances would be good if the economy remains strong through the election as a result of the recent tax cuts and Federal Reserve halting rate rises. Rubenstein then moved specifically to private equity, remarking on the dramatic growth in the industry since the founding of Carlyle. Investors have flocked to PE in order to find alpha and beat the index funds that have also proliferated in recent decades. Rubenstein argued that emerging markets would be where he would invest much of his own money looking towards the future. EMs represent more than half of global GDP, and their share of economic activity will only grow in the future. Rubenstein concluded by emphasizing the importance of philanthropy and civic education for the future of the United States and the world.
Plenary Panel: The Rise of Family Offices

Patrick Abouchalache of The PEGA Group, Luiz Felipe Andrade of Pragma Patrimônio, Heinz Blennemann of Blennemann Family Investments, Lauren Cochran of Blue Haven Initiative, and John Tsui of Peninsula House provided their reasons for investing in emerging markets private equity, which varied widely from the potential for outsized returns to the ability to create environmental and social impact alongside commercial-rate returns. The panelists discussed the advantages of investing under a family office structure. They noted that family offices have the ability to set their own goals and can be more targeted and clear about their preferences. However, this model also means there are fewer checks and balances to decision-making, conflicts can arise through succession, and their diligence capabilities are limited by their small size. Panelists pointed out ways they overcome some of these challenges, including through developing club structures and collaborating with other family offices.
Plenary Panel: The Potential of Private Credit

Jeff Schlapinski of EMPEA announced the release of EMPEA’s latest report Private Credit Solutions: A Closer Look at the Opportunity in Emerging Markets and discussed the findings with private credit investors Johnny Jones of Vantage Capital, Sanjay Nayar of KKR India, S. Sriniwasan of Kotak Investment Advisors, and Paul Sanford of TriLinc Global. Private credit is an attractive strategy because it provides a solution that does not involve equity dilution. Furthermore, the study highlighted the potential of this strategy on three fronts: higher returns, lower leverage, and greater downside protection. The panel agreed about the attractiveness of private credit in emerging markets for investors as well as for business owners, where it can solve for financing gaps, in markets such as Africa and in India. The panel explained that in India, for example, credit markets only opened up around 2009-2010. Now, the banks are preoccupied with cleaning up their balance sheets and getting rid of non-performing loans. Non-banking finance institutions have similarly become absent in the credit space. This presents a unique opportunity if a team is willing to actively manage risk and credit, especially as banks are restricted from financing company acquisitions and land acquisitions. For Africa, there is an opportunity in the mezzanine and senior debt space, though the opportunity is not yet scalable. Deals are small and tough to find, but the upside is that there is little competition in the realm, leading to deals being more affordable. Though niche opportunities are attractive in both markets, they require active risk management. Having registered and near perfect governance documents prepared by experienced legal counsel, as well as “boots on the ground,” and control of the capital stack are all necessary management criteria identified by the panel for this strategy.
The Future of Governance: Lessons Learned From EMPEA’s ESG Community

Hany Assaad of Avanz Capital and EMPEA ESG Community Chair, Akhil Awasthi of Tata Capital Growth Funds, Mike Casey of Portico Advisers, Walter van Helvoirt of FMO, and Steve Okun of EMPEA were some of the collaborators on EMPEA’s recently released report, Governance in Emerging Market Private Capital. The panel discussed the impetus for the EMPEA Governance Working Group developing this report, namely the need to compile a practical guide of best practices for GPs, LPs, and portfolio companies operating across a global range of governance and regulatory systems. They explained that the report covers more than just corporate governance, but also encompasses business integrity and cybersecurity matters. The panel maintained that fund managers must create a strong, positive governance culture that is embedded throughout the firm, one which emphasizes professionalism, honesty, and integration.
Fund and Co-Investment Terms and Conditions

Mara Topping, Partner of White & Case led a discussion on key trends in terms and conditions in EM PE fund formation with a panel of experienced emerging market practitioners, including Mark Kenderdine-Davies of CDC Group, George McPherson of Criterion Africa Partners, Lexi Novitske of Singularity Investments, and Christopher Yebuah of Casey Family Programs. The discussion touched on evolving fund structures and capital vehicles employed in emerging markets. The panelists also addressed the growth of venture capital in emerging markets, and noted the differences in terms between an African VC fund versus the more traditional Silicon Valley VC fund. On the LP front, the panel outlined the need to manage LPs’ desires for co-investment rights and more direct stakes in portfolio companies. The advantages of including DFIs as co-investors in transactions were highlighted. The commercial PE investors also discussed their experiences in investing in funds alongside DFIs, arguing that LPACs of such funds must incorporate the needs of the full range of types of investors subscribed to a fund. It can be challenging for EM PE fund managers to coalesce a core group of LPs to reach the first closing given all of the various interests and requirements imposed by some LPs, especially DFIs.
Opening Emerging Markets For Better Access To Health

This panel brought together investors working across a diversity of emerging markets to improve access to health care for all strata of the economy. Participants included Kevin Xie of Overseas Healthcare Service Group, and Chief Representative, Fosun US Office, Claudio Lilienfeld of Gilead Sciences, Joanne Manrique of the Center for Global Health and Diplomacy, Sari Miller of Sarjay, Inc. and Dr. Helmut Scheuhlser of TVM Capital Healthcare. The panel explained it can be difficult for non-impact firms to sell a strategy focused on expanding health care options for low income individuals living on just USD5 to USD10 a day to potential investors. Consequently, a firm may provide their services to this population out of revenues generated by their more traditional investment strategies; however, the panelists also noted that impact and social considerations are becoming more mainstream among investors. Government health ministries are some of the toughest customers faced by the panel; they are uninterested in changing even the most outdated practices unless the proposed alternative can deliver an improvement in quality for a decrease in costs.
New Financing Models to Support Growth In Emerging Markets

Frank Dunlevy of Overseas Private Investment Corporation (OPIC), Rashad Kaldany of Blue like an Orange Sustainable Capital, Cameron Khosrowshahi of USAID, Jeffrey Liebert of Gazelle Finance, Bert van der Vaart of SEAF, and Kruskaia Sierra-Escalante of IFC spoke on recent innovations in new financing models to unlock capital for emerging economies. Particular emphasis was made on the recent developments in OPIC’s mandate and its upcoming change to the US International Development Finance Corporation (USDFC) with an expanded mandate to include equity as well as increased capital allocation. The panelists agreed that ultimately the hallmark of a successful blended finance product is flexibility, allowing both investors and GPs to create a relationship that works for both sides of the equation, citing examples from USAID’s INVEST. In the view of the panel, there is no standard definition of blended finance, and this is an asset rather than a liability, so long as it incentivizes successful investment rather than subsidizing sub-standard investments.
Risk Mitigation

Bailey McCann of Opalesque moderated a discussion on risk assessment and mitigation with specialists in the field, including Gregory Bowes of Albright Capital Management, Rupert Morgan of Gallagher International and Lila Rymer of Beazley. The panel delved into the unique challenges posed by emerging markets and how a one-size-fits-all approach to risk mitigation doesn’t work. Choosing the right tools and having a realistic perspective of the risks associated with particular markets are paramount to effectively dealing with them. When constructing bespoke risk insurance mechanisms for investors, assets with dependable cash flows that are uncorrelated with developed markets are preferable from a risk assessment perspective. According to the panel, when it comes to risk mitigation, ‘boring’ deals are often better.
Fintech and Financial Inclusion

Emerging market fintech companies are leapfrogging old, inefficient financial infrastructures in developed markets, according to the panel discussion led by Aubrey Hruby of Africa Expert Network (AXN) with Tilman Ehrback of Flourish Ventures, Kai Schmitz of Crestone, Matteo Stefanel of Apis Partners, Gordon Watson of VPC and Camilo Zea of PRONUS. The panelists explained how the regulatory environments in EMs have facilitated the sector’s development. While they agreed that there has been a ‘naming bubble’ around fintech, with the term being overused and therefore somewhat diluted, they disagreed on whether there is equally a valuation bubble in the sector. They also debated over the evolving and future relationship between fintech companies and traditional banks, as well as the potential entrance of large, social networking businesses into the fintech space.
Deep Dive Into The So-Called Current Momentum Of Impact Investing

In a conversation moderated by EMPEA’s Impact Investing Council Chair, Patricia Dinneen, Stephen Lee of Nuveen, Siddhant Raj Pandey of Business Oxygen, Vineet Rai of Aavishkaar, and Jean-Michel of Severino of Investisseurs & Partenaires discussed what is driving the recent momentum of impact investing. The panelists commented that the rise in impact comes from both the supply and demand side. Companies in impactful sectors, such as microfinance, have proven commercially successful and attracted attention from mainstream investors; at the same time, LPs such as TIAA are interested in investing in a way that is consistent with their values. Panelists discussed areas in which investments are simultaneously the most impactful and the most profitable, sharing examples of when these outcomes aligned in their portfolios. They also explained the greatest challenges they face in the impact space, including difficulties in recruiting and retaining talent, educating LPs, keeping up with the wide range of LP expectations, and the cost of measuring, managing, and reporting on impact.
GP-Led Secondaries: Learning From Experience

ILPA’s Managing Director Greg Durst led a group of experienced global private market investors, including Pamela Fung of Morgan Stanley Alternative Investment Partners, Stephen O’Neill of 57 Stars, and Ben Wilson of Pantheon Ventures through a discussion of the nuances of GP-led secondary deals. With the traditional secondaries space fully priced, GP-led transactions represent a potential source of new opportunities, and such deals are no longer confined to “broken teams or funds”. A series of landmark transactions in Emerging Asia has seen GPs using strip deals and other arrangements proactively to generate liquidity for their investors. For limited partners, transparency around pricing and potential conflicts of interest remain sticking points. ILPA’s recently issued guidance on GP-led deals offers a useful reference point for investors wading through the space.
Real Estate – Uncovering the Huge Potential

The real estate opportunity set in emerging markets and how investors are accessing this underpenetrated segment was examined by a panel of experts in this sector, including Brian Finerty of Equity International, Jane Jenkinson of IFC, Peter Lesberg of Realterm and IndoSpace, Ron Rawald of Cerberus Capital Management, and Derrick Roper of Novare Equity Partners. The panel expounded on the need for fund managers to keep in mind the long-term nature of the asset class, which requires them to manage their assets through cycles of volatility that investors may not see in developed markets. Understanding local capital formation trends is crucial in order to recognize how capital flows will affect yields and liquidity in local markets, and investing in operating platforms may give international fund managers better liquidity options. The panel noted the surge in demand for logistics real estate among leading emerging markets as an attractive opportunity for private investors. At the same time, Brazil, India, and China hold a large amount of distressed real estate assets, so investors may also find promising prospects for deploying capital.
Oxford Style Debate: This House Believes That Only With Quotas, Mandates Or Fixed Targets Can We Progress Toward Gender Parity Within Private Equity

The Oxford Debate, moderated by Teresa Barger Co-Founder & CEO, Cartica Management, LLC, regarding the House assertion that only with quotas, mandates or fixed targets can private equity progress toward gender parity saw lively discussion of the topic at hand. Polling at the beginning indicated that 53% of the audience disagreed with the house assertion, while only 47% agreed with the house assertion. Mary Ellen Iskenderian of Women’s World Banking noted that gender-balanced teams produce higher and more stable returns, and female investors have been found to outperform male investors, yet superior performance has not merited increasing representation, so measures must be put into place. Jay Koh of The Lightsmith Group argued that the end goal was laudable, but that alternate methods would be just as, if not more successful, than quotes, mandates, or fixed targets in improving gender parity. By the end of the debate, a parity had been achieved in attendee opinions, with equal numbers supporting both the pro and con positions in polling.
Oxford Style Debate: Keynote Address: Through the Looking Glass: Betting On the Future of Finance in an Uncertain World

Coming from a meeting of the central bank governors of the world, Gillian Tett reported a shared sentiment that the world is very different from the world of ten years ago. While this transformation has roots in changing interest rates and a rapidly evolving technology environment, the greatest change has been in the political climate. A global shift towards populism provides plenty of reason to worry, but Tett argues that it also provides an answer for finance. Drawing on the anthropological origins of finance rooted in the gathering of people, and further illustrated by the origin of common financial terms such as equity, company, and even finance itself. She argued that populism is as much a desire for the common man to be a part of the decision-making process with the elites, as it is a threat to the process. Finance as a means to an end in achieving growth by bringing a wider breadth of people to the table, therefore, can address the concerns of the populists and prove more resilient than finance that is an end in and of itself.

Thank you to all that attended the IFC’s 21st annual Global Private Equity Conference in association with EMPEA