Misconceptions about the risks and structuring possibilities
involved in emerging market mezzanine are limiting investors'
ability to tap lucrative opportunities they wouldn't otherwise
be able to access.
It's proving somewhat of a missed opportunity for mezzanine
providers, as well as growing businesses in developing
economies that are not able to obtain bank finance.
According to the Emerging Market Private Equity Association
(EMPEA), as at April 2014 the proportion of emerging
market-focussed general partners providing mezzanine finance
ranged from 1.2% to 2.6%.
Misunderstandings about the asset class, plus a lack of
competition among private equity firms, means capital
structures are not being optimised through the inclusion of a
"I am actually disappointed about the market's development
over the past two years," said Joachim Schumacher, senior
director at German development bank DEG speaking on an EMPEA
webinar last month. "There has been some progress, but I think