Private Equity: The Differences between Developed and Emerging Markets

From 2002 to 2008, private equity (PE) investments in emerging markets grew from $2.0 billion to $47.8 billion, a 24-fold increase, representing a compound annual growth rate (CAGR) of 70 percent. Over the same period, PE investment in the United States rose fivefold at a 31 percent CAGR. The 2008 number for emerging markets represents 13.8 percent of global PE investment versus just 2.5 percent in 2002.1 This chapter explores some of the factors behind this explosive growth in PE investment in emerging markets. It also highlights important differences between developed and emerging markets and what they mean for both investors and entrepreneurs seeking funding.