Jul 23 2012
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EMPEA guidelines: Special significance for the MENA region
It is no surprise that the Emerging Markets Private Equity Association (EMPEA) strongly believes that private equity is a global force for good, and an important source of long-term financing for growth businesses. It has argued consistently for legal and regulatory environments which support investment and cross-border capital flows, and much of its work around the world has been in support of that goal.
Taking these efforts a step further, the EMPEA Guidelines published earlier this month offer lawmakers new tools to evaluate their own legal environments, and give concrete advice - driven by experience around the world - on the guiding principles for any government that wants to encourage private equity (and not just governments in emerging markets).
The guidelines have special meaning in the Middle East and North Africa (MENA) where private equity faces daunting legal, regulatory and political challenges despite its promise to transform regional economies, build up strong private companies and create jobs.
As EMPEA says in its introduction to the guidelines, private equity investors are able to offer more than just capital to the businesses which they back: their input into strategy, their expanded networks, their operational expertise and governance enhancements can help to transform both nascent and established businesses, contributing to economic growth and prosperity. In a region that is reeling from political upheaval and desperate to create jobs for its restless youth, these messages should resonate at least as much in the MENA region as they do in other emerging markets.
EMPEA's guidelines cover 10 broad areas, each stated as a general principle but with detailed supporting material. The 10 principles cover a wide range of areas, including corporate law, anti-corruption, financial services regulation, enforcement mechanisms, property rights and tax. Although all of the areas covered by the 10 principles are of concern to a much wider range of domestic and international investors, in each case they are examined from the perspective of a private equity investor.
EMPEA says it wants to stimulate and facilitate a dialog with governments and regulators. Every single MENA country stands to gain from evaluating their rulebooks and enforcement practices through the eyes of an investor, and it is to be hoped that these guidelines, and EMPEA's promotion of them, will provide a catalyst for that.
Benjamin Aller is managing partner at law firm SJ Berwin (MENA), where Simon Witney is a partner. Witney also serves on EMPEA's Legal and Regulatory Council.
© Zawya 2012
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