A THOROUGH UNDERSTANDING OF PRIVATE EQUITY

RETOUR SOMMAIRE

A CACEIS PRODUCT DEVELOPMENT PUBLICATION - 2010

PERSPECTIVES FOR THE INDUSTRY

4.

PERSPECTIVES FOR THE INDUSTRY

In a fast evolving environment and in the current economic context, the private equity industry is facing major challenges. However, despite the uncertainty, there are opportunities for suc- cess. These challenges and opportunities are examined hereafter.

4.1

Private equity, a global industry

Despite the current economic challenges, the private equity industry globalisation phenom- enon, already underway, is likely to intensify, as target geographies and fund investor bases become increasingly international. Emerging markets should have a continuing influence and shape the future of the industry. As recently reported by the emerging market private equity association 50 , in face of the global economic downturn, investors plan increased exposure to the region, including the BRIC countries and the Middle East. This increased investor confidence stems not only from the prospect of stronger growth in emerging economies, but also from the increasing maturity of the sector. These markets will certainly remain the most attractive for GPs as well, taking into consid- eration the ready availability of capital and consequently the fund raising easiness. As for Sovereign Wealth Funds (SWFs), with ample liquidity and wide latitude for deploy- ing their capital, they should also extend their influence into the private equity’s domain in the future. These foreign government-controlled funds are faced with growing scrutiny and remain somewhat controversial in the Western world, since many funds remain opaque in terms of the level of information they release pertaining to their investment strategies. Are they a real competitor for the private equity industry and to what extent? In this respect, it should be noted that managers of non-pooled investments such as SWFs are excluded from the AIFM directive scope. Since the private equity industry is set to become increasingly cross-border, hubs such as Luxembourg and Ireland should seize the opportunity to play a growing role for structuring and servicing private equity funds in the future, as they have already demonstrated in the retail fund arena with UCITS. Furthermore, new asset classes such as infrastructure, real estate, renewable energy or microfinance will also continue to contribute to the globalisation of private equity. Indeed, they appeal to a broad range of global investors as the challenges they cover represent a concern of the worldwide development (e.g. climate change, limited natural resources, combating poverty, etc.).

4.1

50 Source: EMPEA, “Emerging Markets Private Equity Survey 2009”, April 2009

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