January 18, 2016
Interviewed by: Privcap
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PE in the Emerging Markets: Unevenly Challenged

Private equity industry experts highlight the key trends in emerging markets private equity in 2015.

Private equity industry experts highlight the key trends in emerging markets private equity in 2015.

PE in the Emerging Markets: Unevenly Challenged
2015 in Review

Peter Witte, EY: In 2015, we saw a slowdown across most emerging markets. We had a slowdown in China. We had falling commodity prices across the board. We also had the imminent rise in interest rates in the U.S., which precipitated a reversal of asset flows back to some of the developed markets. Brazil and Russia are both in a recession right now. So, that’s had an impact on fundraising.

Fundraising has declined relative to last year. PE firms have raised about $22 billion through the end of September, according to EMPEA. That puts us on track for about a 30% decline versus last year. From an investment perspective, activities are on track for about a 20% decline versus last year.

I think we saw double-digit declines in both Asia-Pac and Latin America. That was offset to some degree by increases in the MENA region, in Africa and Central and Eastern Europe. But those are much smaller markets from a private equity perspective.

Sunish Sharma, Kedaara Capital Advisors: The enthusiasm around India has increased substantially. This is largely driven by one of the best mandates that have happened in the last 20 to 25 years in the country. [They have] a forward-looking prime minister…who is focused on helping the business environment and making sure companies have a better environment to work in.

These changes open up opportunities in things like logistics and in consumer-related businesses and around insurance, so there is a lot of excitement around that.

Carlos Garcia, Co-managing Partner & Chairman: I think it’s more a cyclical downturn, but also it’s fair to say that not all the region is affected equally. A combination of what is the dependence on commodities and the quality of the economic policies of each country determines different behaviors in front of this crisis. But…we see the fastest recovery probably in the Pacific area—countries like Peru, Chile and Colombia are likely to recover faster and navigate through this crisis or slowdown in better shape than the countries in the Atlantic region.

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