It usually takes a limited partner three months to decide to commit to a fund, but if you're a GP from an emerging market, you need to budget in a much longer time frame. The process is especially difficult if you're a first time fund manager from an emerging market.
In a breakout session at last month's Emerging Markets Private Equity Forum in New York, co-hosted by Private Equity International and the Emerging Markets Private Equity Association, a room full of GPs heard advice on how to approach institutional investors. The panel included Andrea Kramer, a principal in Hamilton Lane's due diligence group; Maninder Saluja, co-head of emerging markets private equity at Quilvest Group; and Cengiz Selman, a managing director at Acacia Advisors. Paul Denning, founder and chief executive of San Francisco-based placement agency Denning & Company, moderated the session.
Whereas an experienced manager can expect to schedule just one or two meetings with an LP, a first time fund manager should budget for 10 to 15. Not only will this give the LP more time to get to know you, it also gives you time to demonstrate progress and growth. This is because without a track record, you're going to have to prove to the LP that you'll do what you say you're going to do.
If you don't have a track record, you can present a pipeline of deals, showcasing your ability to source deals and conduct thorough due diligence, Saluja said. Demonstrating that you have local support in your country or region also helps to convince LPs in Europe and the Americas, Denning added. Kramer stressed the importance of demonstrating alignment with your existing LPs: giving your investors input in your investment decisions, communicating with them regularly, and maintaining good relations with your advisory board can all help to sway an investor.
Of course, it's difficult to demonstrate any of these things before you have any capital. Denning recommended that in the very early stages of fundraising, firms approach types of LPs known to be more progressive. Family offices, for instance, tend to be early movers in new regions, and are less constrained by liability requirements. Certain markets also lend themselves to sponsorship agreements, which can be a good first step as well.
Ultimately, with their home markets increasingly in disarray, it would be unwise for any LP to ignore the emerging markets entirely. They'll just need to learn to focus on forward-looking due diligence rather than past data, said Selman.
California pulls anti-SWF bill
Democratic California Assemblyman Alberto Torrico has delayed consideration of a bill that would limit pensions' investments in private equity firms with links to sovereign funds following an article from Governor Schwarzenegger proclaiming the bill ineffective. Torrico withdrew AB 1967, a bill that would prohibit all state pension funds in California from investing directly in a private equity company that is owned in whole or in part by a sovereign wealth fund, or in a private equity fund managed by a firm owned by a sovereign wealth fund, if the sovereign wealth fund is associated with countries that are not a signatory to at least five of six international human rights treaties. Torrico said in a statement: ?Although I remain committed to pursuing this issue during this legislative session, I have decided that it would not be beneficial to move forward with the bill today. This delay will give us time to properly address some of the concerns that have been raised and to continue to work with other group affected by the legislation.? In a Los Angeles Times op-ed article printed the morning of the announcement, Schwarzenegger said: ?This measure, AB 1967, is an ineffective way to demonstrate California's concern [about human rights]. It would not lead to the kind of change its proponents hope for ? and it would cause a deep wound to our retirement funds and government programs when we can least afford it.? No announcement has yet been made as to when the bill will now be considered.
KKR hires public affairs head
Kohlberg Kravis Roberts is the latest buyout firm to bring in-house a regulatory affairs guru with the hire of former Republican party chairman Ken Mehlman. A partner and lobbyist in Akin Gump Strauss Hauer & Feld's Washington DC office, Mehlman previously represented New York-based KKR. In his new position as head of global public affairs, Mehlman, who managed President George W. Bush's successful re-election bid in 2004, will be responsible for improving KKR's relationships with stakeholders, regulators, nongovernmental organizations and other third parties, the firm said. Prior to signing on with Akin Gump, Mehlman was head of the Republican National Committee and held various administrative posts in the Bush White House.
Resilience names COO
Cleveland-based Resilience Capital Partners has announced that Ziv Sarig has joined as chief operating officer. Sarig was most recently the CFO of TOA Technologies, a customer appointment and mobile workforce management company. Sarig spearheaded the successful venture capital and debt financing of the company in 2007. Prior to TOA, Mr. Sarig was CFO of the Parkwood Corporation, the Mandel family office, and was a member of the team planning, designing, and overseeing the multi-billion dollar portfolio which included private equity, real estate, fixed income and other asset classes. Sarig was also a board member of IEL, a Tel Aviv-based private equity fund established by Parkwood in 2003. ?Ziv's broad investment, financial, operational and entrepreneurial experience will have a profound impact on our future growth and the eventual success of our investments,? said Bassem Mansour and Steve Rosen, managing partners of Resilience, in a statement.