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Washington, D.C., May 11, 2011—
Lars Thunell, Executive Vice President and CEO of IFC, a member of the World Bank Group, said Wednesday that social impact will play an increasingly important role in the way institutional investors allocate private equity in emerging markets.
IFC held its 13
th
Annual Global Private Equity Conference in association with the Emerging Markets Private Equity Association (EMPEA) in Washington, D.C. on May 10–11. The event, the most comprehensive gathering of practitioners active in emerging markets private equity across the globe, attracted more than 700 private equity industry leaders and experts.
Thunell said that environmental, social, and governance standards have a large part to play in the risk management of portfolios, as well as in fundraising efforts from increasing socially conscious investors.
“Raising environmental and social standards creates value, reduces risk, and improves brand,” Thunell said. “Sound governance also raises standards for other companies in the same industry. This focus on creating value gives private equity great development impact.”
Fund managers participating in the conference agreed. Arif M. Naqvi, Founder and Group Chief Executive of Abraaj Capital Limited, said investors are concerned not only with generating growth and creating jobs, but also with the ethical and social implications of investment decisions. Jonathon Bond, Partner at Actis, said that implementing a strong and consistent environmental, social, and governance framework across a portfolio constitutes “smart investing,” adding that responsible investing “particularly pays in emerging markets.”
Sarah Alexander, President and CEO of EMPEA, said: “The latest EMPEA/Coller Capital survey showed that two-thirds of emerging market investors are taking ESG considerations into account in their manager selection decisions, which has certainly been reinforced by the panel discussions during this conference. The fact that such a large number of LPs are taking responsible investment into account signals the link increasingly being drawn between manager focus on these issues at the portfolio company level and the ability to create value and generate stronger returns.”
Addressing these issues further, EMPEA will present a new conference in October in London in association with Financial Times Business. Entitled Capital Impact, the conference will explore the impact of long-term investment across global emerging markets.
About IFC
IFC, a member of the World Bank Group, is the largest global development institution focused on the private sector in developing countries. We create opportunity for people to escape poverty and improve their lives. We do so by providing financing to help businesses employ more people and supply essential services, by mobilizing capital from others, and by delivering advisory services to ensure sustainable development. In a time of global economic uncertainty, our new investments climbed to a record $18 billion in fiscal 2010. For more information, visit
www.ifc.org
.
About Emerging Markets Private Equity Association
Emerging Markets Private Equity Association (EMPEA) is an independent, non-profit, global industry association that catalyzes private equity and venture capital investment in the emerging markets of Africa, Asia, Central/Eastern Europe and Russia/CIS, Latin America, and the Middle East. EMPEA’s more than 280 members represent a broad array of private equity fund managers, institutional investors, and other key stakeholders in the industry, representing more than 50 countries and over US$900 billion in assets under management. For more information, please see
www.empea.net
.
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