IFC (International Finance Corporation)’s 18th Annual Global Private Equity Conference in association with EMPEA (Emerging Markets Private Equity Association) took place on the 9-12 May at Ritz-Carlton, Washington, DC. Globalturk Capital’s Managing Partner Barış Öney has attended this conference.
The Conference convened with over 800 PE professionals from more than 60 countries. International finance institutions, public and pension funds, private investors, senior investment professionals, directors from leading private equity fund managers worldwide, private equity attorneys, advisors, and consultants, and representatives from government agencies attended The Conference.
EMPEA Reception was held with 500 attendees at the World Bank Auditorium. EMPEA President and CEO Robert W. van Zwieten made the Reception’s welcome speech.
Maria Kozloski, Global Head and Chief Investment Officer, Private Equity Funds, International Finance Corporation (IFC) has made the opening remark of The Conference.
After Kozloski’s remark, Philippe Le Houérou, Executive Vice President and Chief Executive Officer, International Finance Corporation (IFC) gave Executive Address at The Conference. Le Houérou mentioned that “Private Equity in emerging markets can deliver good returns and have a positive impact on the poor. Our work is more essential and critical today. We need to end extreme poverty and build a better global economy.” He added that “Despite gloomy headlines, emerging markets continue to improve with better fiscal performance, higher growth, better corporate governance.”
Arif Naqvi, Founder & Group Chief Executive of Abraaj Group, made insightful remarks highlighting focus on urbanisation and demographics in global growth markets at GPEC2016. He noted that “Emerging markets continue to offer great opportunities when selectively invested. These markets have a leading role in the global economy today. Uncertainty does not change fundamentals. In the next 30-35 years Asia and Africa will held 80% of the world’s population. 1 billion young people will become consumers in the next 10-15 years. Soon 2/3rds of all population will be living in urban areas and 9 out of 10 cities of those will be from emerging market countries. This all adds up to the growth of EM. Istanbul, Jakarta, Mexico City and the like will grow at a pace much more than the growth rate of their respective countries.”
The Conference went on with panels. The first panel was “The Big Picture: How are Global Investors Making Decisions?”. Highlights from the panel were as follows:
Forex risk is quite high in emerging markets as compared to developed markets. It is much easier to hedge debt but not possible to really hedge equity. So the diversity of the portfolio becomes a hedging mechanism itself.
It is important to focus on the micro elements and do a bottom up analysis but it equally is important to look into macros as well.
lFC has achieved the highest returns in Africa Going forward IFC will continue to invest in emerging markets in a diversified manner. Economies who are well diversified and reforms being made are more attractive.
OPIC’s 2 billion dollar portfolio’s 40% is infrastructure investments and 90% of it is green field investments.
Second panel was “Can Emerging Markets Private Capital Investments Generate Attractive Returns in a Slow Growth Environment?”. Emerging markets private capital investments in a slow growth economy were discussed at the panel. Highlights from the panel were as follows:
There continues to be lots of opportunities in emerging markets.
Russia lately has become the fastest growing country in the ‘Ease of Doing Business’ report.
To make sense out of emerging markets, one needs to look at it from a ‘secular’ perspective.
In emerging markets, strategy is overrated and execution is underrated.
IFC has set up the ESG standards many emerging markets by way of private equity investments adding a lot of value to the countries’ ratings.
Third panel was “Creating Value and Maximizing Opportunities: What Does Private Equity Bring to the Table?”. In this panel the importance of understanding the sector was discussed. Also the panelists mentioned about the due diligence’s effects on creating value. Apart from these topic, panelists talked about the three ways to make money. These ways were buy low sell high, get bailed out by finance markets, value creation and the like.
Another interesting panel was “The Role of Innovation in Emerging Economies” where the highlights were below:
It used to be that foreign investment goes from north to south or west to east. We’re starting to see the reverse.
Emerging markets have been innovating solutions for the world such as economy cars, transistors etc.
It is important to build talent in emerging markets.
Key impediments to innovation in emerging markets are lack of early stage capital and mentorship.
IFC’s SME ventures is an example of building such eco-system in new and emerging markets.