The Opportunities of Emerging Markets

Geneva -  Rue du Rhône sits at the heart of Geneva financial district. Both sides of the streets are lined with upscale boutiques, private banks, and the buildings house  family offices to some of the world's wealthiest families.

How many of these family offices are investing in emerging economies?   Due to perceived risk, not many, yet this is all about to change for the following reasons.

The fact is Development Finance Institutions (DFI) and Multilateral Development Banks (MDB) have long been active in EM.  However  today blended finance and catalytic capital are increasing and allowing private capital to flow to the opportunities in Emerging Markets.

The narrative is changing from one of ‘need’ to an ‘opportunity.’

Blended finance is the strategic use of development finance for the mobilization of additional finance towards sustainable development. It attracts commercial capital towards projects that contribute to sustainable development while providing financial returns to investors. Blended finance de risks interest based loans.

Catalytic Capital  is an investment capital that is patient, risk-tolerant, concessionary, and flexible. It is an essential tool to support impact-driven enterprises and organizations that lack access to capital on suitable terms through the conventional marketplace.

Guarantees from MDBs are an invaluable risk mitigation instrument that not only helps to cover perceived government-related risks, but also facilitates access to private sources of finance.  MDBs offer two types of guarantee products: credit guarantees and risk guarantees. Guarantees for investments  are at times unutilized due to lack of information and awareness of guarantees as a means of catalyzing private sources of finance.

The above are all catalysts to help us unlock more private capital particularly when structured together between all the players. There are many tools available to deploy at scale and in the future there will be more vehicles for private capital from Family Offices to partake in this opportunity.