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Slowing Emerging Markets Will Create Private Equity Opportunities

Slowing Emerging Markets Will Create Private Equity Opportunities by Knowledge@Wharton

In Part II of this interview, Knowledge@Wharton asks Michael Rogers, EY’s global deputy private equity leader, and Stephen M. Sammut, senior fellow and lecturer at Wharton, to evaluate the outlook for private equity in emerging markets. Striking an optimistic note, they say that while it has been a challenging year, PE is one area where slowing growth can offer opportunities because it could reduce company purchase prices, a key factor tied to later performance. They also note that while some economies are suffering today, things tend to change “fairly quickly” in the emerging markets. An edited transcript follows:

Knowledge@Wharton: Would each of you to do a quick tour of the world and tell us what you think is happening in private equity in emerging markets?

Michael Rogers: It’s been a challenging year for PE in some of the emerging markets. And part of it is that pullback that occurred on the rebalancing mentioned earlier…. The first place to start might be AsiaPac. We’ve seen a marked drop in activity this year, led largely by the macro issues you touched on in China. And from a fundraising perspective, that had focused on AsiaPac raising about $19 billion for the first half of 2015. And that’s about a 30% decline versus the same period a year ago. Activity similarly saw a decline. And firms announced deals of about $14 billion, which is about a 44% drop by value.

 

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Emerging Markets