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The Role of Private Equity in Developing Economies

March 20, 2018

If you’re interested in Greg Lindae and discovering how private equity has started to transform businesses and communities in developing economies, simply continue reading to discover everything you need to know about private equity in developing economies. Examples of which may include developing economies in South East Asia, Central America, South America and Africa.

The role of private equity in developing economies | lets be game changers lets be game changers

1. Private equity companies choose to invest in developing economies as they’ll be able to obtain a greater share of the profits which are to be made

If you thought that private equity companies which are run by wealthy individuals and companies have chosen to invest in developing economies solely as a charitable act, think again!

When a private equity firm in a developing economy chooses to invest in a privately owned company in a developing economy, they are doing so primarily as businesses in developing countries may have a far harder time accessing loans and as a result may be more willing to part with a greater share of their company, than business owners in first world countries. Who will no doubt have more options, when it comes to searching for capital.

2. Companies which exist in developing countries operate in far less competitive markets

Business is a simple numbers game and when private equity firms invest in businesses in developing nations and economies, the businesses which they invest in will have far fewer competitors to face off against, than businesses which private equity firms may invest in, in developed first world nations such as the United States, Australia, and England.

3. By investing in developing markets private equity firms can significantly decrease their level of investment risk

Some private equity firms simply choose to invest in developing markets as a way of further diversifying their asset portfolio. That way if some of the businesses on their books start to make a loss, chances are that they’ll still be making a decent profit from the businesses which they’ve invested in, in developing markets.

4. Developing markets are grateful for the cash influx from foreign investors

When foreign investors in the form of private equity firms choose to invest in a developing market, their cash influx has a positive flow-on effect on the entire market. As an example, if a number of private equity firms pump tens of millions or hundreds of millions of dollars into a foreign economy, the economy, on the whole, will start to thrive and more local individuals may choose to start their own businesses. Which creates a positive cycle of investment in the local market!

5. Private equity firms often enjoy huge tax benefits if they choose to invest in foreign, undeveloped markets

Another reason why large private equity firms often choose to invest in businesses in foreign, undeveloped markets is that they often are granted huge tax breaks, which the local government may offer in a bid to attract offshore investments. In a bid to increase the local economy!

In conclusion, private equity investments seem to offer a win-win solution for developing markets and for private equity firms and wealthy investors, who are looking for attractive investment opportunities.

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About

Hey there - my friends call me Ricky and this is my first blog. I am passionate about change and growth, but cover a variety of topics. I am also a crazy sports fan. American Football is my sport of choice, but I love watching and playing all kinds of sports. Read More…

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