PRIVATE EQUITY IN EMERGING MARKETS: PERFORMANCE AND ASSET CLASS DIVERSIFICATION

Abstract

In this thesis, we study emerging markets private equity performance, analyzing trends in net IRR over time, identifying factors driving returns, and comparing performance of emerging funds with that of other subcategories of private equity. We see strong growth potential in emerging markets funds. We find that funds raised by GPs located in the same region as their portfolio companies perform significantly better than those with distanced GPs. Funds focused on countries with higher GDPs as well as countries with more volatile public markets appear to be more promising areas of investment. Different breakdowns of private equity by type and by regional focus are characterized by different macro risk factors, motivating an asset allocation policy that diversifies across private equity subcategories.