April 1, 2012
Interviewed by: David Snow

Expert Q&A With Philip Bass, EY

Philip Bass, Partner at EY discusses with Privcap the findings of EY’s Global Private Equity Watch, including how GPs are adapting to new environments, why the emerging markets are being pursued, and EY’s resources across the globe.

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Privcap: EY’s new Global Private Equity Watch report finds that GPs have been very entrepreneurial in adapting to new opportunities. Can you elaborate?

Philip Bass, EY: In putting together the PE watch this year, we actually took a look at private equity behavior over the last 12 months and really looked at what was happening in today’s market. One of the things we noticed was that PEs were behaving much like the clients that they were investing in – very entrepreneurial, adapting to the environment, really adapting their operating model to the current system.

So we talk about companies diversifying, going public, diversifying into different businesses, diversifying into different markets, so really a completely different ball game.

Privcap: What are the largest private equity firms expanding into the emerging markets?

Bass: When you take a look at the mature markets, the developed markets, you’re really looking at reduced GDP growth, really across the landscape. When private equities are looking at their portfolio and their investment strategy, they’re looking to diversify. That’s where the rapidly growth markets come in, s o markets like Brazil, China, India, with higher GDP growth really become much more attractive.

Privcap: How does EY help connect private equity firms with opportunities in the emerging markets?

Bass: Well, we have resources as you know, around the globe and around the world. So as different funds set up offices, we can introduce them, we can help them set up the office, we can introduce them to our local contacts, our local team, and really help them get started. So it should be a much easier transition than it is

One of the keys to private equity is having resources on the ground. If you’re going to invest in Brazil, you have to be in Brazil. It’s really connecting them with our local resources, helping them get started, helping them develop their investment strategy, and then moving forward together.

Privcap: Over the next 10 years, what is your prediction for the magnitude of the impact that emerging markets will have on the private equity industry?

Bass: Emerging markets will continue to be an increasingly big part of the overall portfolio for private equity. I think we’ll continue to see investment again, the attraction and the GDP growth, the rising middle class in many cases.