January 1, 2012
Interviewed by: David Snow

Expert Q&A With Sachin Date, EY

Sachin Date, Private Equity Leader for Europe, Middle East, India, and Africa for EY, speaks with Privcap about investing in traditional sectors in emerging markets and how the breadth of EY’s international presence can benefit companies in emerging markets.


Privcap: What role does private equity play in the emerging markets?

Date: As the developed world is going to face slow to no growth for the next few years, everybody that is looking to invest, be they corporate or private equity, are turning their minds to looking at the emerging market. And what private equity has done is it has adapted its model as it goes into these emerging markets by willing to do different types of deals than it does in the West. And that includes things like partnering with entrepreneurs, fit families, doing minority stakes. And what this enables them to do is to play a significant part in the development of the emerging market itself.

I’ll give you an example. What we are seeing in India is a significant level of investment by private equity into the infrastructure space, power generation, roads, ports. Traditional sectors, which the big private equity players have shied away from in the West, but they are finding ways of doing and investing in these sectors in places like India, I think it will happen in places like Africa as well.

Privcap: How does EY help private equity firms invest successfully in emerging markets?

Date: We can do that a number of ways.  Clearly, as you said, we have a footprint in most of the countries around the world, most of the big emerging markets. And initial presence tends to be in the form of audit practice, which means we have access to a number of businesses that are fast-growing that could do, with investment from the private equity.  So we have the ability to introduce private equity to a number of businesses, which are looking for capital.

In addition to that, we obviously have our transactions and business where we can help them effectively enter into a transaction with a business, whether it’s family-owned or not in the most efficient manner, make sure that the downside risks are protected, the structuring of the transaction is done in the most efficient manner, such that as and when they decide to exit they can get the money back to their investors in the most efficient manner.

The other area that we’ve also been really heavily engaged with private equity is once they have made the investment into the businesses, the form of exit they’re looking for typically tends to be out of these emerging markets, tends to be an IPO. And helping these entrepreneurial businesses or family-owned businesses get ready for an IPO is a long journey. It can take anywhere from 12 to 18 to 24 months, and that’s a process we have been very successful in helping the companies and the PE investee companies get ready for.