Reflections on a Winding Road to EM Private Equity

In late 2005, I would arrive at the office early and catch up on the latest news of sectarian violence in Iraq.  It made for gruesome reading—bodies discovered in vacant houses, tied to chairs with clear evidence of torture.  A favorite tool seemed to be power drills, which were used on knees, ankles, heads.

At the time, I was the youngest member of an interagency team working with senior civilian and military commanders in Baghdad and Kabul on interior ministry and police reform.  U.S. policymakers had dubbed 2006 the “Year of the Police,” but as the year passed by, the results trickled in; and I grew increasingly skeptical about the ability of the United States to effect positive and enduring change in Iraq.  Moreover, when viewed in a broader perspective of state-building, counterterrorism and U.S. national security objectives, I became convinced that the only viable long-term solution was to drive investment into the region, create jobs and, over time, generate licit opportunities for people to feed their families.

So, it was off to grad school to study economics and finance, where I serendipitously learned about something called private equity and how it could drive private sector development in emerging markets.  Unlike in developed markets (e.g., Australia, Europe and the United States), where “private equity” often is synonymous with “leveraged buyouts,” in developing countries, private equity can play a critical role by providing long-term growth capital to companies that are locked out of local bank lending / capital markets, and by sharing management expertise and enhanced corporate governance practices with local entrepreneurs.  And so working with this industry is how I’ve spent most of my time since grad school.

It’s frequently said that in the Middle East, perceptions are reality.  I hope this report demonstrates that there is a sizable gap between global perceptions and local commercial realities.  I hope investors will possess enough variant perception to identify this arbitrage opportunity, and participate in building a more promising future for the region.  Doing so could pay dividends in more ways than one.


2 responses to “Reflections on a Winding Road to EM Private Equity”

  1. Favorite Books of 2015 | Un Passaggio Avatar

    […] See also: Reflections on a Winding Road to EM Private Equity […]

  2. JoeC Avatar

    Mike, as always penetrating insights. I only hope you are right, but with developments in Yemen, the Shia v Suni schism seems to be growing ever wider and more violent. …joe

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