Emerging markets present a vast opportunity set but are complex and nuanced with many local factors besides global influences impacting investment outcomes. Alternative strategies aim to extract inefficiency, complexity and illiquidity premiums but add a further layer of complexity. It takes a strong commitment on the LPs’ (or their consultants) part to devote adequate resources, all with a keen eye, intellectual honesty and tenacity (a tall order) to identify local factors, practices, culture, people etc. to fully diligence EM alts. opportunities. GPs in EM often find it overly challenging to address the perceptions, objections, concerns, logistical issues of sophisticated investors leaving them with many unknowns preventing them from making informed decisions. This results in a disconnect with LPs and often investment-worthy opportunities and managers are lost in the US institutional ecosystem. EMA’s value proposition lays in its commitment to conduct a deep-dive 360 degree investment audit (a.k.a. due diligence) to independently verify from LPs’ perspective, the managers’ investment thesis, core competencies, business operations and fund management practices. This allows LPs and/or their consultants to have more advanced dialogues with GPs to arrive at informed and quicker decisions. EMA does not provide an investment recommendation per se, nor do its opinions on various aspects of the investment constitute an offer to buy or sell an investment offering.
As discussed above, it requires a strong commitment to examine local factors and actors affecting EM alternative strategies that are often overlooked with a generalist (asset-class) research approach. EMA is founded upon solid years of conducting due diligence on alternative strategies in emerging markets (with a focus on complex strategies in Asia) thus building a specialist skill-set and a due-diligence framework that EMA customizes to the idiosyncrasies of each individual opportunity and market. EMA’s tenacity to gain a granular understanding of the opportunity and the manager takes as strong a commitment as the willingness to overcome time differences and other logistical challenges that mostly accompany opportunities across the developing world. EMA endeavors to separate facts from opinions on both qualitative and quantitative aspects of an investment. EMA’s opinions are intellectually honest supported by objective analysis devoid of any business considerations.
EMA’s objective opinions would be as independent as a financial auditor’s or a rating/valuation agency’s. Contract renewals are unlikely; thus removing any conceivable incentives to issue favorable opinions. It is imperative that GP are open to a candid disclosure of all positives and negatives associated with their investment offerings where EMA retains full discretion on reporting. This lends itself to a rigorous screening process upfront to identify transparent GPs with a compelling value proposition.
The independent investment audit allows the GP or their placement agents to have a more advanced dialogue with LPs and/or their consultants/advisors in turn enabling them to have deeper dialogues with GPs to arrive at informed and quicker decisions. LPs can also consult with EMA for no cost.
EMA’s investment audit is geared toward empowering LPs in making informed decisions on EM alternative strategies either individually or in consultation with their financial advisors/consultants. Thus EMA could be retained either by LPs directly who are looking a) to assess if an EM alternative strategy is worth pursuing; or b) if an opportunity is investment-worthy; or c) for a comprehensive analysis prior to formally deciding on making an investment. On the other end of the spectrum, EMA could also be retained for an objective investment audit by GPs such that it allows prospective LPs to have a more advanced dialogue with GPs thus arriving at informed and quicker decisions. LPs can also consult with EMA for no cost in such instances.
EMA is conceived and founded by Kamal Suppal with a well-defined vision of providing intellectually honest knowledge transfer from GPs to LPs from LPs’ perspective. It’s a strong commitment to maintain independence and objectivity to deliver on this mandate as much as the tenacity to conduct a 360 degree deep -dive overcoming cultural differences, local business practices, logistical challenges and time differences. This is a tall order and calls for a different mind-set that can only be delivered by specialized professionals who are committed to go beyond the traditional asset-class approach in a regular 9-5 job. Hence, EMA shall over time onboard carefully identified like-minded professionals who can be reliable partners in living and enhancing EMA’s mission and thought leadership.