Perspectives of An LP in Emerging Markets Private Equity
Access to deal flow, particularly truly proprietary deal flow, requires local contacts. Due diligence requires knowledge of the reputation of sellers (particularly in minority positions) and of local quirks in governance and transparency. Building teams in fast growing companies requires access to talented local management and the ability to win their confidence to leave stable, prestigious jobs. Capacity in each of these areas is enhanced if the GP’s team is both locally based and has senior local nationals. Even something as basic as efficient communication requires mutual respect and understanding that is greatly facilitated by local presence, which can take the form of either a dedicated local operation, a partner- ship between a foreign GP and a local firm, or a local branch of a foreign GP.