Yet the emergence of several new markets is expected to trigger a more global approach to investment.
In a review of the investment environment in 33 countries, the report suggests that most of the world’s leading private equity markets possess similar economic characteristics. These include ‘stable regulatory environments, liberal policies towards private enterprise, well-funded financial systems and an appetite for entrepreneurship,’ and ensure that the likes of Australia (in third place), Canada (fourth) and Denmark (fifth) perform well.
However, several of the major Continental European nations fare less well, with Germany placing 15th, France 17th and Italy a lowly 24th. To Apax, this represents the fact that many of these countries are ‘still undergoing a restructuring of their industrial landscapes’. However, as such changes occur, ‘many former state-owned companies or industrial conglomerates [should] become attractive buyout targets.’
Although the likes of China (33rd), India (32nd) and Russia (30th) prop up the list, these markets are perceived as possessing ‘huge potential as they begin to overcome their complex operating environments and regulatory structures.’ In order to take advantage of these emerging opportunities, private equity funds are anticipated to become increasingly global in their focus.
‘The future is not without risks,’ says Dr Martin Halusa, Apax’s chief executive, ‘but managing risks in a cyclical market is an essential part of what we do. The challenge is to maintain that performance as the scale of opportunities continues to grow.’
See also: How to tell if your business is right for private equity – All SME owners should be aware of the hidden risks associated with private equity, before accepting any finance deals.