TriLinc Global Chief Investment Officer, Paul Sanford, recently participated in the Oxford-Style Debate at the International Finance Corporation’s (IFC) 20th Annual Global Private Equity Conference in association with the Emerging Markets Private Equity Association (EMPEA).
The Global Private Equity Conference (GPEC) is the leading emerging markets private equity event in the world, each year hosting over 850 investment professionals from more than 60 countries. Organizations from family offices, to fund-of-funds, to private equity managers gather for thought-provoking discussions, debates and analyses that are most top-of-mind for today’s business and industry leaders.
On May 16th, GPEC hosted an Oxford-Style Debate on the subject of Private Debt versus Private Equity. Both debaters were also impact investors; Paul Sanford argued on behalf of private debt as Chief Investment Officer at TriLinc , and his counterpart Andrew Kuper argued in favor of private equity as Founder and CEO of Leapfrog Investments. Before presenting arguments, the audience was asked to vote in favor for private equity or private debt using a voting system through a mobile phone application integrated with the event.
Mr. Kuper opened the debate with a strong position rooted in the upside potential of private equity. He challenged the audience to imagine investing in a successful emerging markets company such as Alibaba.
“If you had invested in Alibaba… do you say, ‘Oh, how I wish I had invested in their bonds or given them a little bit of credit,’? Or do you say, ‘I wish I had invested in the equity, because I’d be a billionaire!’” Andrew Kuper, Founder and CEO of Leapfrog Investments.
Mr. Sanford opened the debate with an equally strong position on private debt and asked the audience to raise their hands if they were an LP or allocator. As member of the investment committee for City of Hope, a billion-dollar cancer research facility, Mr. Sanford is himself an LP and understands that pitching private equity in emerging markets might have his committee members, “pass out” (which drew a few laughs from the audience). Identifying with a large majority of the audience, he argued that private equity alone was too risky despite the opportunity to make large returns.
“[For LPs,] Emerging Market private debt is at a minimum the best way to dip their toe into the asset class, into the region, get comfortable with private assets, see the return stream and then say, ‘Well, that was a great experience – why don’t I look at private equity?’” Paul Sanford, Chief Investment Officer of TriLinc Global.
In true Oxford style, both debaters fielded questions from the audience before the audience was asked to cast another vote. Mr. Sanford’s arguments changed enough of the audience’s votes from private equity to private debt, and he was named the victor. In good fashion, both debaters felt a combination of both private equity and private debt is the best path to success when investing in Emerging Markets.
You can watch the debate in its entirety below:
Impact Investing was an overarching theme at this year’s 20th Global Private Equity Conference. Several panels and breakout sessions focused on impact investing, Environmental, Social, and Governance (ESG) investing, and the growth of the UN’s Sustainable Development Goals (SDGs). It was Secretary Madeleine Albright’s opening statement that truly connected emerging market investing and impact investing.
“Good Emerging Market investors are all impact investors, and some of the best opportunities in Emerging Markets don’t just serve one country but many geographies,” Madeleine Albright, Secretary of State, 1997-2001.
Dr. Jim Kim, President of The World Bank, spoke with David Rubenstein, Co-Founder of The Carlyle Group. Dr. Kim discussed the need to make capitalism work for everyone on the planet and suggested that private investments will play a critical role in providing the capital and expertise needed in emerging markets. Mr. Rubenstein predicted that more private capital would enter emerging markets over the next 10 years as growth trends and the economic climate in emerging markets improve.
“We have 8 billion people with middle class aspirations,” Dr. Jim Kim, President of The World Bank.
TriLinc Global would like to thank EMPEA and the IFC for continuing to advance an industry by way of organizing, educating, and inspiring so many through its Global Private Equity Conference. We’re honored to have been asked to participate in a special way this year and look forward to next year. For more information on EMPEA, visit their website: https://www.empea.org/