Mature and Not Mature Enough: Comparing Private Equity in Developed and Emerging Markets

Abstract

International private equity faces transition issues. In developed markets, it show signs of industry maturation (i.e., lower returns compared with the past, slower rates of growth in the value of fundraising and investing, and ever-increasing accumulation of “dry powder”). In contrast, private equity in emerging markets experiences some evolutionary pressures (i.e., volatile but growing returns, inconsistent growth rates in key statistics, and institutional challenges). This dichotomy creates multiple problems for limited partners and general partners regarding asset allocation, liquidity considerations, and search for premium returns. This article evaluates these issues in detail.

TOPICS: Private equity, developed, emerging, equity portfolio management