Private Equity – Sarona Global Growth Markets PE Funds
Sarona invests in mid-market companies in partnership with local private equity firms across the Global Growth Markets –Asia, Africa, Latin Americaand Emerging Europe. We seek to deliver strong risk-adjusted financial returns and strong social and environmental impact.
Key elements of our investment strategy
- Capturing growth: We invest in the growth-stage companies that serve middle class consumers across emerging markets. Therising middle class drives demand for quality goods and services at affordable prices –in education, healthcare, financial services and consumer goods. Access to these growth sectors is best be achieved through private investments.
- Active investing:Sarona endeavors to know all private equity firms in emerging markets, forging partnerships with the best of these firms to actively build profitable, mid-market companies.
- Delivering impact: Sarona works with local private equity partners to change thinking and implement impactful strategies in portfolio companies. Gender equality and climate action are key.
- Low correlation: Investments offer low correlation to developed market equities and are highly diversifying for most portfolios. Sector and geographic diversification hedges against idiosyncratic risks.
- Improved economics: A blend of direct investments and fund investments delivers highly diversified portfolios with a management fee structure that rivals that of traditional private equity funds.
- Investor partnerships:Some Sarona funds have secured partnerships with OPIC/USDFC, which are designed to boost LP returns
Sarona Global Growth Markets PE Fund 1 LP, closed-end, fully invested
Sarona Global Growth Markets PE Fund 2 LP, closed-end, investing
Sarona believes the best risk-adjusted opportunities for investors lie in high-growth sectors that are set to benefit from the rapidly growing middle class in these markets. As people’s purchasing power increases, they typically spend more money on healthcare, consumer goods and education. As the graph above illustrates, listed equities in emerging markets are heavily slanted towards financials and energy. In contrast, more than half of PE exposure focuses on the high-growth sectors we believe best captures the growth opportunity within these markets.
The graph above illustrates why it is difficult for investors to capture the growth in frontier and emerging markets by simply investing in listed equities. In Peru, 75% of listed equities are focused on mining and financials, which only constitute 15% of the GDP. PE gives you better access to sectors such as consumer goods, utilities and industrials, which are more representative of the real economy.