Partners Group evaluated more than $31 billion of private equity secondaries opportunities in emerging markets between 2010 and 2013 and only invested in 1 percent of them, the firm revealed in a recent report.
Selectivity is key for the Swiss investment manager. Partners focuses on working with strong partners and maintaining a local presence in emerging markets which limited some of the opportunities, global co-head of secondaries Adam Howarth told Secondaries Investor.
“In order to be a good investor in the emerging markets you have to be familiar with them, and in private markets that often means being very local. Being on the ground, understanding the different opportunities that each country, region or continent may offer is very important.”
Howarth added a significant amount of secondaries deal flow came from China and India, along with Africa and Latin America.
Pricing was also a factor for Partners Group because different discount rates are used in emerging markets.
“You always have to assess if there are outside factors that may impact. You can have a good company with a good balance sheet, but there can be external factors. There can be geopolitical risk or regulatory change. There could be a health scare that impacts investments or currency fluctuations,” Howarth said.
There are a lot of factors that might be different than investing in a more mature market or in the primary market, he added.