Speaker 1:
From the Library of the New York Stock Exchange at the corner of wall and broad streets in New York City, you're Inside the ICE House. Our podcast from Intercontinental Exchange on markets, leadership and vision and global business. The dream drivers that have made the NYSE, an indispensable institution of global growth for over 225 years. Each week, we feature stories of those who hatched plans, create jobs, and harness the engine of capitalism, right here right now at the NYSE and at ICE's exchanges and clearing houses around the world. And now welcome Inside the ICE House. Here's your host, Josh King of Intercontinental Exchange.
Josh King:
Over the course of nearly 250 episodes of the show, we've welcomed a lot of founders of companies to our microphones, then there's something about the spark in their eye that's tangible. They can't wait to tell you their story, the problem they're solving and above all, their vision to help change the world even in a small way. Private equity is so often the umbilical cord between these leaders and the capital that they need to execute on their vision. Here in the US, there's a long history of putting money to work in this way. In what was called the deal of the century, back in 1901, JP Morgan himself acquired the Carnegie Steel Company to form US Steel, price of that was 480 million back then perhaps the first modern buyout in history.
Josh King:
But what if you're not in the USA? Say you're in Argentina, Nigeria or India, and you have a brilliant idea or think you can manage a business better than it's being run, or you believe you can take a company to the next level before it goes public. Innovation knows no borders. There are tons of examples of these kinds of businesses take Rappi, the Colombian delivery platform or Byju's, the Indian edtech company or even Alibaba, that's NYSE ticker symbol B-A-B-A, baba. For a long time, there really wasn't any place for investors to get in on the ground floor private businesses beyond developed markets. There were structural inefficiencies, financing gaps, huge aversions to risk. In some parts of the world there also wasn't a culture of private investing. In some places there wasn't even a history of capitalism.
Josh King:
But investors persisted. They saw promise and economic growth that these faraway places and founders had on them. They just needed to find a way to source new opportunities and carry out the due diligence necessary to protect their partners. And that's where today's guest comes in. Investors need data, research and connections to help them understand the regulations, regimes and opportunities in these lesser known places. They grew into a mission to connect key market participants with deals that drive investment returns and meet societal needs across the globe. Cate Ambrose heads that effort and steers a prominent organization that represents private capital investors, managing more than $2 trillion in assets across Asia, Latin America, Africa, Central and Eastern Europe and the Middle East.
Josh King:
The Global Private Capital Association helps investors share their experience, data and learnings in one place, all while bringing transparency, analysis, and bringing to light stories about how private capital is transforming the world. Our conversation with Cate Ambrose is coming up right after this.
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Josh King:
Our guest today Cate Ambrose is CEO of the Global Private Capital Association or GPCA, the global industry association for private capital in emerging markets. Members include more than 300 fund managers, institutional investors, family offices, sovereign wealth funds, development finance institutions and industry advisors who manage more than $2 trillion across 130 countries. Welcome Cate Inside the ICE House.
Cate Ambrose:
Thank you, Josh. It's a pleasure to be here.
Josh King:
So if I've got my history right before you entered the world of private capital, you were a journalist. What was your beaten, what led you to reporting?
Cate Ambrose:
Even a little more complex than that. So writing was my first love in high school and that evolved into journalism at the same time that I was studying abroad in state my junior year abroad in college. And by the time I was finishing school, I had written a multi field major for journalism, Latin American focus and Spanish and moved back to Spain after graduating college. And because I was in a very different part of the world, I think my career path was affected by the opportunities in that market. I covered the Mideast Peace Conference for CBS News, I did a series of trips around Spain and Portugal interviewing political and private sector heads for advertising supplements, which is what the opportunity at a time and wrote a series of articles on a range of topics for some local publications. But my interest really was in economic development across global markets and in Latin America in particular.
Josh King:
I've watched a couple of your interviews on CNN International where you speak Spanish, but your bio also says that you're fluent in Portuguese. You also have little Mandarin. Now I've got a nephew who seems to master new languages the way I devour new microbrews. What does a wiring for different languages do for seeing opportunities around corners?
Cate Ambrose:
For me language is the portal into feeling that I'm close to another part of the world and it's something that I understand and feel close to. For me the experience of traveling to Argentina and speaking Spanish or Brazil and speaking Portuguese just means that I have a different set of relationships, and I'm able to understand that part of the world much better. And that's something that I'm always seeking out to do, no matter where I'm traveling. For example, India is a country that I've traveled to many times. Unfortunately, another language is not necessarily there, but I'm still looking to get plugged into because at the end of the day, it's not about understanding of financial opportunity, it's about understanding the market, understanding of people, understanding the culture, developing personal relationships, establishing trust, and language is an absolute critical piece to crossing that bridge.
Josh King:
At the end of June, your organization, the Emerging Markets Private Equity Association or EMPEA, was rebranded as the Global Private Capital Association or the GPCA. Now, my company ICE recently underwent a big branding exercise, and I wanted to compare notes. Why was it important to rebrand, and what are you hoping to accomplish under the new moniker?
Cate Ambrose:
Yeah, I'm going to even take a step back from there, and just touching again a little bit on my career evolution. I spent 10 years building and running the Latin American Association or the Association for Private Capital Investment in Latin America, headquartered again, here in New York. And it was from that experience that I was then approached, and really learning got to know the industry and in some cases, the global context as well, I did travel internationally on behalf of [inaudible 00:08:18] Asia, in other parts of the world. But in coming into the role, and what was at that time EMPEA, the Emerging Markets Private Equity Association, before I took on that challenge and that opportunity, I had a very specific vision in mind. And fortunately, the context was right, working with a board of directors of EMPEA to think about that repositioning and what we wanted to achieve with the organization.
Cate Ambrose:
So for me, one of the key starting points was to do away with the emerging markets terminology, to my mind is, I'm sure you appreciate well, it's incredible how language influences how people think about things. If you think about when BRIC was created the concept of Brazil, Russia, India, China, I look back on that and I think it doesn't need to be me who will say it, others will say these countries have nothing in common with each other and how they've developed had nothing. But at a particular point in time it was a concept around that and it was amazing how sticky it was. I would hold the same is true for the emerging markets terminology, very difficult to replace I know because I spent two years working on thinking about how to refer to our markets. And there was a lot of definition coming from a very western mindset.
Cate Ambrose:
So again, well, let's call them growth markets, or let's call it the next generation markets. What I would say is, I'm interested in building and running an association that is of represented by the key players in these markets. There is extraordinary wealth, very successful fund managers in their own right were local to these markets, international players have local offices and people on the ground there. And I didn't want to run an organization that was perceived as being a US lobby group or a Western lobby group into these markets, but rather that acknowledge the incredible scale of these economies, the wealth, the opportunity, the local players, and doing away with that emerging markets terminology. And another key piece here is that, obviously, we're talking about dramatically different parts of the world.
Cate Ambrose:
I mean, I guess most of the indices still throw China in there. I mean, in what context, you're talking about China's emerging market, it's clearly not. It's the largest, [inaudible 00:10:25] is the largest economies in the world. And just looking across global markets, you can't throw China in the same bucket as you're throwing Argentina or Nigeria or other parts of the world. So it was critical to come up with new language around that. And then private equity, we evolved into private capital as a reflection of private credit, which has become an expandedly important part of what's being invested, the strategy that's been used in our markets as well, in addition to venture capital and infrastructure, real estate, real assets, etc. So the rebrand was really important.
Josh King:
Was part of the strategy as well the move, I guess, I mean your headquarter is both from DC to New York City, but also co-headquartered in Singapore.
Cate Ambrose:
Absolutely. So to give it back history, EMPEA was originally founded through a partnership with the International Finance Corporation of the World Bank, the IFC, and they were among the first limited partners and private equity funds globally. So it was a handful of people at the IFC who started hosting a conference around investing private capital and investing in emerging markets and EMPEA sort of grew out of that. So there you had the headquarters in Washington, DC. To me coming into this role a year and a half ago, it was very important to not be headquartered in a political capital. One of the things that I really love about this platform and the way it's structured, we're a nonprofit, which is great. And we're global. I didn't want to be perceived as representing the US government or in that context, even though we still work very closely with the IFC on a conference, the World Bank or the IFC.
Cate Ambrose:
I wanted to be seen as an independent nonprofit institutional organization representing investors around the world. And New York's a great place to do that from. In terms of Singapore, I'm sure I don't need to tell you how dynamic Singapore [inaudible 00:12:15] this has been going on for years, but really accelerated over the last year and a half as well. So delighted that we've been able to open an office in Singapore, we did that in partnership with a local government, the monetary authority there who's co funding that office. We have three Singapore nationals working there, producing research for us. And Asia is a big area of focus. It's clearly from a scale perspective, the most exciting and largest part of the world.
Josh King:
For the first decade of the century, Cate, and the 2010's really investment in emerging markets, private capital increased I guess about eight fold from maybe 3.7 billion in 2001 to 29.2 billion in 2015. Now, private capital by its nature far more difficult to track and analyze and other financial assets. A fundamental pillar of GPCA's work is generating data, intelligence and deal cases to help drive transparency and showcase innovation across global markets. Can you tell us a little bit about how you go about sourcing and publishing the data?
Cate Ambrose:
I'm going to take a step back into when I initially launched our data program for Latin America in 2008. And by definition, private equity is a very secretive industry, or historically, it's been a very secretive industry more so even at that time. And then not a lot of transparency and countries like Brazil, Mexico, Argentina, again, in terms of getting data. So it was critical that we again, developed close personal relationships with our member firms, and have them understand how we're using this data. So Preqin or Refinitiv or others are commercial providers of data. But our members know that we are producing this information to evangelize global capital to go into their market. So they have a vested interest in making sure that they're sharing deal data with us, that we know about their exits.
Cate Ambrose:
And there's always a challenge. We don't get everything, there's always something that will be shared. But having the personal relationships with the GPs is really important to being able to position the markets and typically educate institutional investors about the opportunities. So that was something that I built initially and in Latin America and coming into the role now at GPCA is actually phenomenal backend infrastructure. We have nine people on the research team between Singapore, New York and a couple people in Latin America. We have research team of nine that are all day long searching secondary sources and then connecting on a primary basis with our member firms and other investors in the market to collect data. It's just so easy to talk about what's going on at 10,000 feet.
Cate Ambrose:
I mean, this will translate through to any conversation you and I have about ESG etc. Being able to point to specific transactions and see what's actually going on in the ground is something that I love. It's something I really love about private markets as opposed to public markets, you're just so close to the deals, and able to see what's being invested in and tell the story of the opportunity through the case of each individual investment, in addition to aggregate data, I think is a really valuable resource.
Josh King:
So help open up the aperture a little bit on this process, what challenges do these investors face when they're going out and looking for those private capital opportunities in other parts of the world? And how does GPCA fit into the puzzle?
Cate Ambrose:
Many of our members are local managers on the ground in Indonesia, Malaysia, India, Brazil, Mexico, Middle East, etc. So the members that we represent are often sitting in those markets, have deep local networks. One place where you see fund management firms of emerging use out of family offices. So a family office that has a set of relationships, is even as an industrial group or something else spins out something that was part of the family office into a separate group, or people who are working in investment banks and have this set of local relationships. So actually, I wouldn't say deal sourcing is ever easy, right? But actually, it's not the most challenging part of being successful in these markets because typically, the conventional wisdom is you have to be local. You need to have fun on the ground.
Cate Ambrose:
We have seen some international firms that over the years have built a successful models partnering locally with others that have a headquarters in New York or somewhere else, and then co-investor partner with others. Of course, Canadian pension plans, and many big international groups are investing into these markets, but the deal sourcing side is precisely where the opportunity is, arguably more attractive and less competitive than in the United States or Western Europe. There are simply many more, a much larger universe of companies or startup opportunities that are starved for capital and are looking for capital. The challenge typically comes around issues like currency volatility, back [inaudible 00:17:18] economic cycles, navigating through cycles, just some of the volatility that's inherent in some of these markets. That's what's make [inaudible 00:17:24] a little bit more difficult, but the deal sourcing side is actually quite attractive.
Josh King:
What about the government side? I mean, you're used to sort of dealing with the regulatory environment here, or many of our listeners are. But are you finding the governments in these countries are friendly to private equity? Or is there a tension between state owned businesses and private founders?
Cate Ambrose:
My experience has been overwhelmingly that governments across many markets are very actively looking to encourage private equity and venture investment into their markets. They view it as on par to foreign direct investment, because we're not talking about short term speculation with currencies or in and out of public exchanges, but rather committing hundreds of millions or billions of dollars to businesses on the ground infrastructure projects, transforming the corporate governance of family owned businesses. It's an incredible value add to the money that goes into these markets. And my experiences that I've been invited by heads of state, more experience in Latin America, but in other countries as well, certainly in Africa, India.
Cate Ambrose:
China's a more complicated place but let's look at China, look at all the venture funds, that you see that came out of the US and are successful there are today. So governments are actually very, very welcoming of both creating a domestic private capital ecosystem, often with like local pension funds, backing fund managers or public programs. Many countries have government funded funds that will back local managers to develop a local ecosystem at [inaudible 00:19:02] and now at GPCA, we play a role talking to those groups and giving advice on policy frameworks or ecosystem development.
Cate Ambrose:
Having said all of that, that doesn't mean that governments don't create a whole host of challenges for investors as well. I think, fast forwarding over the last 20 years, and the many lessons that have been learned through hard knocks and challenges and macro cycles. The takeaway is do not rely on public policy or GDP growth as a private capital investor in these markets. You need to be smart enough and sophisticated enough to identify opportunities that were going to be relatively uncorrelated with Afro trends. You're not looking to invest into highly regulated industries. I think that's one of the reasons that the tech sector has become so attractive across [crosstalk 00:19:57].
Josh King:
Yes. So if you're not focusing on regulated industries, and you're not focusing particularly on the macroeconomic environment. But what thematic opportunities link some of the investments together? What trends are existing across the deals that general partners are taking advantage of these days?
Cate Ambrose:
[inaudible 00:20:16] you're starting from a lower base of consumption as you referenced in your intro, you just have structural inefficiencies. There's just less capital available from banks or traditional financing sources, right? So even before you get into the sectoral trends there's just, goes back to the same thing on generating deal flow, there's just a bigger opportunity in so many of these money markets to put capital to work. It's just less competitive. And the GP maybe has more work to do than arguably in the US or Western Europe. You're going and you're rolling up your sleeves, you're really transforming these companies, you're addressing governance, etc. So even though you're not necessarily relying on a macro trend, doesn't mean that you're not looking at a fundamental opportunity across so many of these other markets for growth within a sector.
Cate Ambrose:
Now, in terms of key drivers today, I would site two that are just overwhelming. One is climate and we see that globally. So to the same extent that you've seen the extraordinary focus on climate investing, and so many more, both publicly traded, but also private funds, focusing on climate related strategies, across global markets that represents everything from energy transition to circular economy, data centers where they're looking for efficiencies. So there's an enormous amount to do in the climate space and there's an opportunity for the climate, lens, food tech, ag tech, etc, on almost anything that you're doing and that's very timely now. So there's a great opportunity to focus on the climate opportunity across these markets. And then the other big piece is I'll use innovation as a bigger theme but really, it's digitalization and the application of technology, but also life sciences as well, that has become a massive driver that's only been accelerated with a pandemic.
Cate Ambrose:
So when you think about the technological evolution of these markets, you're starting from a place where there's an opportunity to bypass or leapfrog some of the legacy infrastructure, and systems that were in place. US is one of the last places in the world or Western Europe, we see people paying with cash. In China, there just is no cash and so many other parts of the world, huge parts of the economy are relying on FinTech or digital payments, there's just an opportunity to really accelerate that ed tech, health tech. And then besides even the sector's where you're looking at technology startups, you have the digitalization of traditional businesses, again, greatly accelerated by the pandemic and technology infrastructure.
Cate Ambrose:
Some of the most successful deals that we've seen out of these markets in the last few years have been IPOs of cell towers and Africa or fiber optic networks. Again, data centers, as I mentioned has been a huge play. So there's an enormous amount to do around technology. It's a very cross cutting theme and not just with the fastest growing startup, but just the opportunity to implement digitalization across all sectors.
Josh King:
Climate innovation, digitalization. After the break, we're going to dive deeper into Cate's outlook on the markets, the specific regions that GPCA focuses on, and what's happening in the future for private investment overseas. That's all coming up right after this.
Dan Primack:
Hi, I'm Axios business editor Dan Primack, host of Axios Recap, a new weekday podcast featuring interviews that gets straight to the point. My guests are business leaders, politicians and reporters driving the day's biggest stories. We're joined now by Jalen Rose
Jalen Rose:
[inaudible 00:23:55].
Dan Primack:
Bill Ackman.
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Dan Primack:
Senator Amy Klobuchar.
Senator Amy Klobuchar:
Thank you Dan.
Dan Primack:
Steven Soderbergh.
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Thanks for having me.
Dan Primack:
Andrew Yang.
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Dan Primack:
You can find Axios Recap on Apple or Spotify, or wherever you like to listen to podcasts.
Josh King:
Welcome back. Before the break, Cate Ambrose, the CEO and board member of the Global Private Capital Association and I were discussing her background, her thoughts on emerging markets and some of the events that are shaping the private capital landscape. Cate, as the vaccine rollout continues in the US and Europe, the delivery in other parts of the world, especially the places that the GPCA focuses on, has been a lot more sporadic. COVID-19 is set to have this disproportionate impact on emerging markets using that phrase again, and frontier economies. How has COVID-19 transformed the landscape for private capital across these places? And what's the role of private capital in fighting the pandemic?
Cate Ambrose:
Well, healthcare has been a very important sector for investment for a number of years across Asia, Latin America, Africa, Central Eastern Europe, and [inaudible 00:24:59]. So it was already a place where we saw a lot of private capital money going into everything from health platforms and insurance to hospital chains to biotech and life sciences. And that has certainly accelerated during the pandemic. China was just an extraordinary year in 2020, we saw record investment in life sciences and health. And there's no question that private capital is playing a role not only in delivery of logistics, that's definitely a key piece and how medicine is getting distributed. But also they need to think at the level of their portfolio companies, some of them are employing thousands and thousands of people in sectors where they might be on the front line or be interacting.
Cate Ambrose:
And it's been a challenge for them to think about how they manage that, for example, Advent International bought Walmart in Brazil a few years ago. It's now group of big and I know that that was a big push for them was to shift the... think about in response to the pandemic, how they were managing those employees who was on the frontline, how they were being protected, how employees were being supported, but also the pivot to E-commerce. So coming to that piece, like in other parts of the world, there's just been an acceleration of remote access and technology is a driver of opportunity. So just like you've seen it develop markets, tourism, any sectors where you're seeing the requirement, restaurants, etc, had been hit harder. But there's been a massive pivot, in some cases with lighter infrastructure than you might have expected to see in other parts of the world to be able to pivot to digital delivery.
Cate Ambrose:
So E-commerce was already growing. We've seen a number of cases of member firms where they started pivoting from a traditional retailer to an E-commerce player. And tech has been accelerated dramatically. India, when you mentioned Byju's in your opening remark, it's now actually the most valued startup in India ahead of some of the E-commerce players and FinTechs and others. So I think digitalization is where you've seen the opportunity grow. Obviously, there's a massive human capital cost to these countries. And it's something that we as an organization care about and are focused on. But from an investor perspective, what we see is looking for solutions, increasing digitalization, increasing investment and healthcare and life sciences, and just thinking about the role of private capital and supporting employees, staff and workers through a very difficult cycle.
Josh King:
You've got Cate deep connections with the United Nations having served as the chief of advocacy for the Commission on legal empowerment of the poor at the UN Development Programme. And also, as a steering member for the UN Institutional Investor Partnership for Sustainable Development. Why is global cooperation in the private capital space so important?
Cate Ambrose:
Over the last several years, we've seen this increasing isolationism. Frankly it's too late to turn back the clock. Our economies are very, very interlinked and obviously, it's a complex moment with China. When you take a look at the Chinese VC ecosystem or investment ecosystem, it's impossible to pull apart the pieces of the US firms that went to China 20 years ago or more, the Chinese people who work for those firms that spun off and raise their own funds. And one of the things I love about the GPCA platform, is the opportunity to say continue to engage with a country like China, where you see so much complexity. It's not advocating for one side or the other, it's just saying, engagement, the moment that we go into our silos, you really have limited the opportunities for coming up with solutions and something that's going to have a successful outcome all the way around.
Cate Ambrose:
So I would say using China as one reference point, many of our member firms, be they institutional investors investing in Chinese funds, or private equity firms or venture firms that started out of a US group or develop locally, our board member JP Gan of INCE Capital originally worked for Carlyle, then worked for [inaudible 00:29:15] which is a leading Chinese VC and then spun out and raised his own dedicated venture fund with a lot of invest, a lot of LP commitments from US and other markets. So that kind of interaction is important. More broadly, climate pandemic speak for themselves. So if climate change is not a problem that we're going to solve internally within the US, within any country in Europe is only going to be a problem to solve with collaboration.
Cate Ambrose:
And then innovation, and the private capital money that can go into be it electric vehicles, be it again all the different ways renewable energy, all the different types of platforms and solutions that we see across these markets, require cooperation, require private capital investment. The irony is there are trillions of dollars of liquidity floating around between sovereign funds, Canadian pension plans, private equity funds, venture funds, private credit. There's a lot of capital available for investing in these areas. And sometimes governments that there need to play a critical role but are not able to be at the forefront of generating solutions. Private capital, or private sector money is really important as part of that. So one of the things that I adore about this platform is looking at the complex challenges like climate change or responding to a global pandemic, and seeing that private sector sort of creativity and the capital available for addressing those problems.
Josh King:
So with all this capital available, and with an issue like climate being so prominent on the topic of environmental, social, and governance ESG, we talked about it a little bit before, considerations have become a focus for every asset class and private capital, no exception. Fund managers, institutional investors across the world, emphasizing sustainability and governance as part of the research and ongoing due diligence. Can you talk about some of the trends that you're seeing in the space?
Cate Ambrose:
Yeah, again, this is where I love that you're able to look at portfolio companies specifically, if you look at the many platforms to invest in publicly traded exchanges, or ETFs, et cetera, there's a lot of concern around greenwashing. And I certainly appreciate that that's an enormous challenge. There's so much confusion around language. Because we represent managers, building, hydro plants, or off grid solar, or very investing in specific platforms in these markets, we're able to identify and talk about it in a much more specific way, the impact that those investments are having. Frankly, there's just less of an opportunity for greenwashing, when you're investing directly into projects than when you're investing in publicly traded companies, [inaudible 00:32:01]. And thinking about how we were going to address this issue at GPCA, we said, "Rather than coming up with a set of principles or a guideline, let's just go directly to the portfolio companies."
Cate Ambrose:
And this year, we published our first ESG deal book, investing for growth deal book, which profiles 18 cases across Africa, India, Latin America, Southeast Asia, etc. With everything from a paint company in Madagascar to E-pharmacy in India seeds company in India, an ed tech company out of Brazil. And let's see how those investments, who they're hiring, what kind of job creation they're generating, what percentage of their employees are women? How are they training their employees? What sort of environmental impact are they having? And how are they thinking about their environmental footprint? So looking specifically at the dealer level is something that we've thought it's a really more valuable way of profiling the opportunity in these markets.
Cate Ambrose:
We're also going to be giving out the first GPCA deal awards for best environmental sustainability, best social impact, innovation, gender diversity. And those awards are evaluated by a series of independent institutional investors. It's not something that we sort of put our hand up and say, "Well, we like you, or we're doing this for our marketing platform." There's [inaudible 00:33:24] meant to be real rigor around it, because my experience is that when you lead by example, when you give GPs the opportunities to step up and position around a particular deal, others will look at that, and it's again you really see [inaudible 00:33:38] in ESG. I'll to be honest with you five years ago, I was trying to do ESG panels and have managers talking about ESG. And the reaction was, "I really focused on fundraising. I'd rather talk about performance. I don't want to talk about ESG. That's just [inaudible 00:33:54] we're not Impact Fund."
Cate Ambrose:
That is that paradigm has shifted completely. It is now an absolute. It's remarkable how quickly it shifted. The focus on impact in ESG is so central for institutional investors looking at opportunities globally today that I think managers understand it's something that it's important for them to be able to demonstrate success [inaudible 00:34:15].
Josh King:
On the one side, you have people sort of wondering how much greenwashing is going on. On the other side, you have talking about creating this award and the rigor that goes around it. How actually do you roll your sleeves up and either get the right people around the table or establish the rigor and sort of get above any concerns that this is greenwashing?
Cate Ambrose:
We did this program for a number of years in Latin America. We're expanding it globally. I had something I had executed on for a number of years. I can tell you last year we published a deal book as I mentioned. I was personally on Zoom calls with not only GPs but portfolio company executives from Vietnam to the Middle East to Brazil in deep dive conversation. So we actually spend hours talking to both managers and looking at the businesses through a very careful lens. We start with this kind of tail case, platform. And then we have a panel of institutional investors to whom we deliver a set of indicators. It usually takes about six or seven hours. We have to really ask our friends to do this, to go through each one of the indicators on each one of the deals.
Cate Ambrose:
But because this is being done at the dealer level, it's much easier to have those detailed statistics and data on what the transformation has been within the country, within the company. And frankly, we doubt anything that appears to be greenwashing. It all comes back to really knowing the markets well, being very independent about how we're approaching it and getting some good partners on board as judges.
Josh King:
So you threw out an example earlier of a paint company in Madagascar. And I'm kind of curious what that company might be like, and how many employees they have, how long they've been founded, that may have just been an example of there may be a specific name behind it. But generally, Cate, and we talk about this the New York Stock Exchange all the time, it's always on Stacy Cunningham's mind when we realize at what point in a company's lifecycle, they're actually tapping into the public markets, because a lot of private companies are staying private longer. Does this trend extend globally? And how does this affect the group of investors that you represent?
Cate Ambrose:
It really is a fundamentally different dynamic in so many of our markets. And I can say, in all honesty, that listing on a US exchange is considered the hallmark of success for portfolio company executives and startup entrepreneurs around the world. We've seen many of our member firms listed on US exchanges over the years, and that's always considered an extraordinary success. A lot of the times, the investors are looking for that liquidity of that. So exits are a critical part of what we measure in our data, and what we're looking to, those are the case studies of success is when you're able to point to a liquidity event and a successful outcome, nothing better than an IPO. So I wouldn't say you see that same dynamic of companies wanting to stay private for an extended period of time, but there are windows of opportunity.
Cate Ambrose:
So again, currency volatility has been one of the great challenges for private capital fund managers across these markets in terms of where they are with currency exchange, and when the timing is going to be right. Or, again, macro trends, right? You do see windows in which it might be more likely that if you want to list or have having an exit opportunity, the response from market participants is not going to be there, if you've just impeach the president, or if the currency has been depreciated by 30% over the last few months. So there tend to be windows of opportunity for exits. And typically, managers and entrepreneurs are looking for those windows. And when that window opens, they're looking to take advantage of that.
Cate Ambrose:
Now, having said that, on the venture side, where we've seen so much growth over the course of the last five, six, seven years. The amount of money going into venture backed startups across Asia, Latin America, Africa, Central Asia, Europe, Middle East has really exploded. I think there you see greater discipline from entrepreneurs to not... You don't see this companies, [inaudible 00:38:38] leaders. You don't have a we work or the extraordinary billions of dollars going into companies that have not yet turned a profit. Most countries and most entrepreneurs frankly just haven't had that opportunity. China would be a bit of an exception. There you do you see very, very large companies that have gone public and there's just more and more money and more liquidity for participating in startups.
Cate Ambrose:
They're both for rounds and then for IPOs. But in a region like Latin America or in Central and Eastern Europe, entrepreneurs have had to be much more disciplined about being profitable and demonstrating that before they're going to be able to get retail markets confidence, retail investors confidence and launching an IPO.
Josh King:
Last fall you shared with private equity international that Asia was really the most attractive region for private investors. Your comments seem to resonate with other investors too. KKR close to $12.5 billion fund, TPG, Warburg Pincus, Blackstone all closed funds that were oversubscribed. Has the trend continued, and what opportunities are so attractive to private equity investors?
Cate Ambrose:
It's fundamentally a question of market scale goes without say, China's a market of 1.4 billion people India just about there as well and they're both [inaudible 00:40:00] almost 1.4 billion. So market scale cap matters a lot for both private equity and venture investors. The larger the population that you're able to serve and the platform that you're able to have, the easier it is to put money to work. A lot of investors think about Africa in that same way as well when they think about Africa or Latin America as an integrated market but the Asian economies really dominate. Southeast Asia has just been particularly dynamic again in the venture and the tech space. And in recent years, with the growth of a grab or gravitate [inaudible 00:40:34] merger, the IPO that's coming there.
Cate Ambrose:
So there's the scale of the opportunity in the market. There's early also been extraordinary wealth created in those markets. As we know, China is minting billionaires at a fairly quick clip. So there's the entire drive into wealth management as a huge opportunity and US firms moving into China around wealth management, but you also see great wealth creation in India and in Southeast Asia. And so there's local sources of capital as well that are investing and then you have sovereign funds in places like Singapore with GIC and Temasek. GIC and Temasek are some of the biggest institutional investors into not only Asian opportunities, but other opportunities globally. So when you think about investing in global markets, this comes back to this teammate positioning away from the idea of emerging markets.
Cate Ambrose:
The scale of the opportunity in places like China, India, and Southeast Asia, the amount of wealth that's been generated there over the last 10 years. And the opportunity to tap into those local institutional investors [inaudible 00:41:45] LPs and funds to drive money into growing sectors from healthcare and education to Infra and climate, the scale of the opportunity in Asia has really been born.
Josh King:
So moving away from China, India, Southeast Asia, a little bit more toward your old neck of the woods. In a summit in 2016, you said that Latin America, Peru, Argentina, in particular, were poised to attract more capital as the political environment favors friendly policies. What's the state of private capital markets in Latin America today?
Cate Ambrose:
So looking to Latin America, what's really been extraordinary is the growth of the venture opportunity in the region. The scale of money going into venture backed startups over the course of the past five years has accelerated dramatically. In 2017, we surpassed a billion dollars being invested in that year for the first time. And between 2017 and 2019, we went up to 4.6 billion for that full year investing in 2019. We've just finished the estimate for the first half of 2021. And that's the thing like $6.2 billion so far surpassing the full year record from 2018 already just in the first half of this year. So the growth has been absolutely extraordinary. I mean, Nubank is one of the FinTechs that stands out. I think they recently surpassed a $40 billion market cap.
Cate Ambrose:
I remember their founder Davi Velez, when he was working for Sequoia before he founded Nubank way back in 2012. Fast forward, 10 years later, he is managing a company which Warren Buffett recently committed $500 million to. So you mentioned Rappi in your opening remark, and this is another example where you see greater discipline. Entrepreneurs, tech entrepreneurs in Latin America had been forced to do more with less capital historically. You haven't had that extraordinary liquidity that you see the US market or China where valuations are really not as attractive or competitive as they are in a region like Latin America. So I'm happy to say that the tech opportunity [inaudible 00:43:53] Latin America despite the challenges of the pandemic is very robust today.
Josh King:
Intercontinental Exchange long such a dominant player in US and European oil and gas markets certainly with the Brent benchmark also the WTI in the US, recently moves into Middle East working with the United Arab Emirates, starting ICE Futures Abu Dhabi. Cate, investment in the Middle East so often focused on oil and gas, but your research has found there are a lot of burgeoning opportunities also in FinTech, delivery, logistics, entertainment, healthcare. What are the hotspots you're keeping your eyes out for?
Cate Ambrose:
Well, here again, is where we see precisely she referenced a strategic shift away from natural resources. So we see managers much more focused on tech and tech opportunities. We have seen some successful IPOs and exits the out of the Middle Eastern Market over the course of the last year. We also did a case study of fine hygienic that was from our deal book backed by Gulf Capital, which is paper goods, paper products. They were producing, they were producing masks as well. [inaudible 00:45:04] hygiene accelerated dramatically. So just even basic consumer goods that you see an opportunity for private capital managers to come in professionalize scale, serve unmet need. There have been so many areas where maybe there's been a reliance on imports or sourcing from other parts of the world. And now there's an opportunity to build domestic champions or also companies that are scaling across multiple markets in the Middle East.
Cate Ambrose:
We also see that NENA, Network of North Africa, so Egypt, Morocco, other parts of North Africa, there are a lot of managers that have a strategy investing across the Gulf, or launching a business that has come out of the Gulf and expanding it. Particularly fintech, we've seen a number of examples of this, expanding it into North Africa, and then using North Africa as a jumping off point for Pan regional place in Africa as well.
Josh King:
Cate, what's next for GPCA?
Cate Ambrose:
Well, it's a really exciting time to be leading a global organization that's connecting investors around the world. To your earlier point or question around global cooperation, there's never been a greater need and a greater opportunity to communicate and connect investors at a time when so many markets have looked inward. And yet at the same time, the liquidity in the world demands the opportunity to diversify. As I mentioned, we have Canadian pension plans, CPPIB is on GPCA's board of directors and all the leading Canadian players are members, as are many of the sovereign funds. And they're all looking 5, 10, 15, 20 years into the future. So in terms of thinking about the future, that's really by definition, who we are as an organization. And I would say again, coming back to those core theses of climate ESG and technology, these will be the drivers of opportunities in these markets.
Cate Ambrose:
These will be the drivers of opportunity [inaudible 00:47:01] returns globally. I am convinced that there will not be a shift back to an earlier mindset where governance, where environmental sustainability are not a priority for investors. And so to be at the forefront of influencing the industry and positioning around it. And in those spaces is really an extraordinary opportunity. There'll be much more that we'll be doing. It's been frustrating not being able to travel. I haven't been on a plane for quite some time now. And I was used to being in three countries or four a month. So really looking forward to getting back to traveling again.
Josh King:
Where's the first trip plan for?
Cate Ambrose:
Singapore is there, I keep hearing a screen back and forth because I haven't actually visited our Singapore office since it's been opened, [inaudible 00:47:46] was one of my last international trips in January of 2020. So really looking forward to being close to the ground and working with our partners at local associations and local member, first, we have a host of training programs that we do in market for GPs. We host private meetings for investors, take institutional investors to other parts of the world. So critically, we're looking forward to being back on the ground locally, meeting with managers and looking to just evangelize capital into these markets into sustainable and forward looking investments going to the future.
Josh King:
Cate Ambrose, come back after you've been on the road for a while report back to us what you're seeing.
Cate Ambrose:
Thanks so much, Josh. Great, talking with you.
Josh King:
Thanks so much for joining us Inside the ICE House. And that is our conversation for this week. Our guest was Cate Ambrose, Chief Executive Officer and board member of the Global Private Capital Association. If you like what you heard, please rate us on iTunes so other folks know where to find us. And if you've got a comment or question you'd like one of our experts to tackle on a future show, email us at [email protected] or tweet us @ICEHousePodcast. Our show is produced by Stefan [inaudible 00:48:58] with production assistance from Pete Ash, Ken Abel and Ian Wolff. I'm Josh King, your host signing off in the library of the New York Stock Exchange. Thanks for listening. Talk to [inaudible 00:49:08].
Speaker 1:
The information contained in this podcast was obtained in part from publicly available sources and not independently verified. Neither ICE nor it's affiliates make any representations or warranties expressed or implied as to the accuracy or completeness of the information and do not sponsor approve or endorse any of the content herein, all of which is presented solely for informational and educational purposes. Nothing herein constitutes an offer to sell, a solicitation of an offer to buy any security or recommendation of any security or trading practice. Some portions of the preceding conversation may have been edited for the purpose of length or clarity.
