2013 Wharton Private Equity Review: Navigating the ‘New Normal’

Some $200 billion of new capital went to private equity (PE) and venture capital management partnerships globally in 2012. For the first time, 20% of that total — some $40 billion — went to fund managers in emerging market countries. Surprisingly, of that amount, only $15 billion went to the BRICs (Brazil, Russia, India and China). That leaves $25 billion that went into non-BRIC emerging markets, such as Columbia, Chile, Peru and Mexico. What’s more, Sub-Saharan Africa has witnessed solid growth in fund managers and capital under management. Turkey also has emerged as a destination, as have Malaysia, Thailand, Vietnam and Indonesia.

The 2013 Wharton Private Equity Review, sponsored by EY, explores this major shift in articles based on the 2013 Wharton Private Equity & Venture Capital Conference. Also included are articles that look at: U.S. regulatory developments in PE; how one company helped to recapitalize a troubled Irish bank, and how PE helps to create value more generally. Finally, a piece on venture capital considers the challenge of generating consistent returns and the growing allure of New York City over Silicon Valley. Some of the articles included here were written by Wharton MBA students from the Class of 2013.

Download the entire report: PDF (625Kb)


Ernst and Young
Wharton Alumni Private Equity and Venture Capital Association


Fast-growing Middle Classes in Emerging Markets Lure Private Equity
During the 2013 Wharton Private Equity & Venture Capital Conference, a panel of leading private equity players explained how they have harnessed opportunities in emerging markets, even though tough regulations and shifting market dynamics present hurdles at every turn. Panelists reviewed the real and perceived risks of investing in these fast-growing markets, and described how some of them provide particularly fertile ground for nurturing investments.

The Arab Spring and Private Equity: Time to Take the Plunge?
Many international investors might prefer to stay far away from the Middle East and North Africa, especially after the Arab Spring rocked the region. But others are cautiously optimistic about prospects for the area. Some believe the Arab Spring has presented savvy investors with an unprecedented opportunity to snap up quality assets at deep discounts. Is now the right time to invest?

Very Public New Regulations for a Very Private Industry
Private equity (PE) firms are either going to sink or swim as new financial regulations bear down on the industry. Intense scrutiny from regulators and the media has altered the industry landscape, making the once opaque sector now uncomfortably transparent — for some. A look back at the evolution of the regulations and the increased media coverage of recent years sheds some light on how PE managers can adjust to the “new normal.”

Investing in Times of Distress: The Bank of Ireland and WL Ross
A group of American and Canadian private equity investors, led by the influential billionaire Wilbur Ross, set an example for the industry when they made a $1.45 billion (€1.1 billion) investment in the struggling Bank of Ireland in 2011. The deal, completed at a fire-sale price, shows that other investors may be able to pick-up similar bargains in Europe as credit and sovereign debt crises continue to rage across the region. What are the key lessons from the Bank of Ireland transaction, and how might they apply in other situations

How Do Private Equity Firms Create Value?
Private equity (PE) isn’t simply about buying a company, throwing out management and making dramatic changes to ensure the company is on the right track. The process is far more nuanced. A panel of PE experts gathered at the 2013 Wharton Private Equity & Venture Capital Conference in Philadelphia to discuss best practices when it comes to value creation. The panel revealed some tried-and-true methods for working successfully with the management of acquired companies to ensure goals are aligned and strategies are executed in a way that ensures companies flourish.

Venture Capital: The Art of Picking the Few from the Many
Venture capital investors may be the funders behind the next Facebook or PayPal, but most of the time, their investments lead to dead ends. This makes it difficult to generate consistent returns. At the 2013 Wharton Private Equity & Venture Capital Conference in Philadelphia, panel members discussed this thorny challenge and others, and also cited potential opportunities for the sector, with a focus on the growing allure of New York City over Silicon Valley.


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