Unlocking Growth: Private Market Investment Opportunities in Emerging Economies

Private market investment has gained significant traction in recent years. This space is evolving steadily and attracting a broader base of investors, and its momentum is expected to persist in 2025. While global uncertainties and a high-interest-rate environment persisted throughout 2024, hindering sponsor-backed transactions, the outlook for asset classes such as private equity (PE) and private credit became more optimistic. This scene is marked by a rebound in deal activity and increased capital distributions.

Private equity

PE remained resilient heading into 2025, supported by easing interest rates, improved liquidity, and growing investor confidence. Global private equity dealmaking has rebounded after two subdued years, driven by a healthier financing environment, lower interest rates, and renewed interest in operationally sound businesses. Dry powder levels remain elevated, especially among top-performing general partners, positioning PE firms for active deployment.

In emerging markets, PE continues to attract attention due to robust demographic and economic tailwinds. Southeast Asia, Latin America, and parts of Africa stand out for their faster GDP growth, youthful populations, rising middle classes, and fast-growing key sectors ripe for capital deployment such as technology, infrastructure, healthcare, and energy. Urbanization, digitization, and government incentives, particularly in fintech and sustainable energy, act as catalysts in investment opportunities.

Technology and fintech sectors are evolving due to rapid smartphone adoption and digital inclusion, driving opportunities in e-commerce and financial services. The healthcare sector is supported by the rising demand for accessible, high-quality care; this creates new entry points, particularly in aging and underserved populations. Infrastructure and sustainable transport are being driven by public-private partnerships and the energy transition, accelerating investments in logistics, digital infrastructure, and clean energy.

However, risk management remains essential. Political instability, regulatory volatility, and inconsistent governance frameworks present challenges. Successful PE investors are increasingly collaborating with local partners, developing region-specific exit strategies, and integrating environmental, social, and governance (ESG) principles into their decision-making processes. ESG-aligned investments not only mitigate risks, but also unlock access to international funding and community support.

As global limited partners seek diversification and long-term outperformance, interest in emerging markets is expected to grow. While challenges remain, investors who combine disciplined underwriting, local insight, and sustainable impact strategies will be best positioned to capitalize on the evolving PE landscape in these emerging markets.

Private credit

Private credit remains one of the fastest-growing asset classes globally as traditional bank lending continues to retrench due to tighter regulations, rising capital requirements, and macroeconomic volatility. These constraints have led to a structural funding gap across leveraged lending, asset-backed finance, and mid-market segments, which are all increasingly addressed by private credit.

In emerging markets, the private credit landscape holds opportunity for investors. Many corporations face limited access to capital due to constrained local debt markets and banking sectors. As banks in developed markets withdraw from non-core geographies, high-quality borrowers in emerging markets are turning to private capital providers for more flexible and long-term funding. This shift offers investors access to portfolio diversification in a relatively untapped market.

Private credit in emerging economies is often viewed as riskier than that of developed economies. However, recent studies show that corporations in emerging markets generally maintain lower leverage ratios, higher interest coverage, and greater levels of cash relative to debt compared to that of developed market peers. Moreover, illiquidity premiums remain substantial in emerging markets private credit, with return profiles often exceeding those in traditional public markets and even developed private credit. Targeted strategies that blend high-quality performing credits with selective exposure to discounted or distressed assets can deliver more attractive returns.

The lack of competition, the scarcity of dry powder, and the underdeveloped capital markets in emerging markets further enhance the attractiveness of these opportunities. Investors with strong local relationships and the ability to act swiftly in volatile environments can access favorable pricing and terms that are often unavailable in developed markets.

In parallel, partnerships between banks and private credit are reshaping the credit landscape. Major global banks are increasingly forming joint ventures with private credit firms to originate and syndicate loans, blending the banks’ corporate relationships and origination capabilities with private lenders’ agility and flexibility. These models, already scaling in North America and Europe, are expected to expand into emerging market regions.

In a world of persistent uncertainty, private credit in emerging markets is growing rapidly as a high-yielding, resilient, and strategically relevant investment opportunity.

About the author

Nisrina Nur Ulfah is an MBA candidate at the Cornell SC Johnson College of Business, Class of 2025, and an Emerging Markets Institute Fellow. As part of the Emerging Markets Institute, she developed a global case competition on an electric vehicle company in Vietnam. Prior to her MBA, Nisrina worked at several investment banks and in corporate development roles in Indonesia, focusing on mergers and acquisitions, fundraising, and restructuring. She led transactions across industrial, consumer, energy, infrastructure, and technology sectors. With a deep understanding of Southeast Asian markets, she is primarily interested in the investment space and the dynamic growth opportunities in emerging economies.

All views expressed in articles published on the Emerging Markets Institute webpage are those of the author(s) and should not be taken as reflecting the views of the Emerging Markets Institute.