Emerging Markets Private Equity A Publication of the Emerging Markets Private Equity Association Volume VI, Issue 1, Q1 2010 Viewpoint April 2010 2010 promises to be an improvement over the challenging year behind us, but we are not out of the woods yet. Limited partner capital is slowly return- FEATURES ing to market, and portfolio performance is trending upward. But new issues, particularly potential regulation and LP-GP terms, will likely dominate, The AIFM Directive’s Negative and complicate, much of the discussion in our industry this year. Impact on Developing Countries— EMPEA’s Letter to the EU 4 Fundraising will remain quite challenging because LPs will remain cash con- strained until exits from their Western buyout portfolios resume. Additionally, pending regulation in Europe, if enacted in its current form, would seriously IFC’s Experience in Emerging impair the ability of non-EU GPs to raise capital from EU investors. Markets Private Equity 6 In early March, EMPEA issued a letter to the Spanish Presidency of the Euro- pean Union (reprinted in this issue) articulating concerns about the “third The ILPA Principles: How Will country” provisions of the proposed EU Alternative Investment Fund Man- They Shape LP-GP Relationships ager (“AIFM”) Directive. These provisions would deter EU investors from in Emerging Markets? 12 investing outside the EU. EMPEA’s letters joined a chorus of objections from ILPA, EVCA, the BVCA, and the US Treasury Secretary, along with a host of others. EMPEA continues to voice its concerns as the debate over the final 2009 Emerging Markets AIFM Directive terms work their way through the European policymaking Private Equity Fundraising process. and Investment 15 EMPEA has always been an advocate of strong LP-GP relations, as they serve the interests of the entire industry. Today’s fundraising environment will be NEwS and Data characterized by some of the most robust dialogue between LPs and GPs to date, encapsulated by the ILPA Principles released in 2009. EMPEA has been Featured Events 10 working closely with ILPA and development finance institutions to facilitate a dialogue on the significance of the principles for our members. Our efforts include a webcast that drew over 160 participants, a summary of which you’ll Funds Launched & Closed 16 find in this issue. EM PE Performance 17 As LP funding does come back to the market, it’s more important than ever to demonstrate the return potential of the asset class. As one of the larg- est investors in emerging markets private equity, the International Finance Member News 18 Corporation (IFC) is in a position to judge return potential across develop- ing countries. Drawing on nearly two decades of experience, the IFC’s David Wilton shares the IFC’s track record, and challenges some fundamental Notable EM PE Exits & IPOs 20 assumptions about the risks and opportunities within emerging markets PE. We will be sharing updates on these and other critical issues facing the indus- EMPEA Members 21 try at the 12th Annual Global Private Equity Conference on May 11–12 at the Ritz Carlton in Washington, DC. I sincerely hope to see you there, if not ear- lier at the Members-only Reception the evening of May 10th. Sarah Alexander, President and CEO Emerging Markets Private Equity Association 1055 Thomas Jefferson St. NW, Suite 650 • Washington DC 20007 • Phone: +1.202.333.8171 • Web: empea.net Emerging Markets Private Equity About EMPEA Editorial Director Jennifer Choi The Emerging Markets Private Equity Associa- tion (EMPEA) is a non-profit, independent, glob- Writing and Research al industry association that promotes greater Ted Hickey understanding of and a more favorable climate Harrison Moskowitz for private equity and venture capital investing Nadiya Satyamurthy in the emerging markets of Africa, Asia, Europe, Latin America and the Middle East. Guest Contributor David Wilton, IFC EMPEA was founded in 2004 with the belief that private equity and venture capital can be Creative Direction & Production Management critical drivers of economic growth in emerging Greg Farmer markets while simultaneously generating strong returns for investors. Executive Editor Carlos Perry In support of its mission, EMPEA: • Researches, analyzes and disseminates au- Production Assistance thoritative information on emerging markets Blue House private equity; www.bluehouse.us • Convenes meetings and conferences around © 2010 Emerging Markets Private Equity Association the world to promote information exchange between leading fund managers and institu- All rights reserved. Emerging Markets Private Equity Quarterly Review is a tional investors; publication of the Emerging Markets Private Equity Association. Neither this publication nor any part of it may be reproduced, stored in a retrieval sys- • Offers professional development programs tem, or transmitted in any form or by any means, electronic, mechanical, to enhance knowledge transfer; and, photocopying, recording, or otherwise, without the prior permission of the Emerging Markets Private Equity Association. • Collaborates with stakeholders from across the globe. Subscriptions For subscription or single issue purchase, visit www.empea.net or email empea@ empea.net. Subscription for one year (4 issues) is US$995. EMPEA members receive the Emerging Markets Private Equity Quarterly Review for free. Advertising Opportunities The Emerging Markets Private Equity Quarterly Review offers readers an Become a Member analytical and factual look at private equity investing in emerging markets. The Quarterly Review features include regional and country market anal- The Emerging Markets Private Equity Associ- ysis, an overview of current trends in the industry, benchmark data from ation is the only global body that represents Cambridge Associates, and guest articles from leading thinkers and prac- the growing industry of emerging markets titioners. Its readership comprises a broad array of private equity fund private equity. As a leading global player, managers, institutional investors, service providers, and other key stake- EMPEA offers features that meet the needs holders in the industry from more than 50 countries. of a broad range of institutions active in emerging markets, including General Part- Advertising opportunities are available for upcoming issues. For more ners (GPs), Limited Partners (LPs), business information, please contact Greg Farmer at [email protected] or call associations, service providers, multilateral +1.202.333.8171. and academic institutions, and governmen- tal bodies. For more information on how to become a member, visit empea.net, contact Kyoko Terada at [email protected] or call her at +1.202.333.8171. 1055 Thomas Jefferson Street NW • Suite 650 • Washington, DC 20007 USA Phone: +1.202.333.8171 • Fax: +1.202.333.3162 • Web: empea.net 2 Emerging Markets Private Equity Association Latin America and Caribbean Seminar At the IFC’s 12th Annual Global Private Equity Conference in Association with EMPEA 12 May 2010 This intensive half-day seminar, supported by LAVCA, will include a keynote delivered by His Excellency Luis Miguel Valdivieso Montano, Ambassador of Peru, and several dynamic panels covering the evolving Bra- zilian private equity landscape, the emergence of local institutional investors, the developing PE industries of Chile, Peru, Mexico and Colombia, as well as the changing face of the Caribbean private equity industry. Speakers include: • Joaquin Avila, Managing Director, EMX Capital • Antonio Bonchristiano, Co-Chairman and Co-CEO, GP Investments • Haydee Celaya, Private Equity and Investment Funds Director, International Finance Corporation • Sidney Chameh, Chairman, ABVCAP and Partner, DGF Investimentos • Álvaro Gonçalves, Managing Partner, Stratus Investimentos • Luis A. Harvey, Senior Managing Director, Nexxus Capital • Michael Lee-Chin, Chairman, Portland Private Equity • Mark Ramsey, Executive Director and President, Macquarie Capital • J. Scott Swensen, Chairman, Conduit Capital Partners, LLC • Christian Warnholtz, Partner, WAMEX Fondo MIF …and many more! For more information, please visit globalpeconference.com Quarterly Review Vol VI Issue 1, Q1 2010 3 EMPEA’s Letter to the EU on AIFM Directive’s March 3, 2010 The Spanish EU Presidency Ms. Elena Salgado Mendez Vicepresidenta Segunda y Ministra de Economía y Hacienda c/ Alaclá, 9 Madrid, Spain Cc: Ms. Dolores Duran Bono Dear Minister Salgado Mendez, On behalf of the Emerging Markets Private Equity Association (EMPEA), I am writing to express our concerns regard- ing the Alternative Investment Fund Managers (AIFM) Directive and to highlight its potential negative impact on our members and more generally on economic development in emerging economies. EMPEA is a non-profit, independent, global industry association whose mission is to promote the development of private equity and venture capital investment in the emerging markets of Africa, Asia, Europe, Latin America and the Middle East. EMPEA represents 280 fund managers and institutional investors headquartered in more than 40 developing countries, and its membership includes the most active European development banks that invest in pri- vate equity funds in developing markets. Private equity investment is a critical driver of economic growth and job creation in developing countries, while simul- taneously generating strong returns for investors. Since 2005, such funds have raised more than US$200 billion for targeted investments into developing countries, providing a crucial source of capital