What is the development impact of private equity investing in emerging and developing markets? What is the development impact of a specific private equity fund or investment? EMPEA often hears such questions from institutional investors, fund managers, the media, and other stakeholders.
How to measure development impact is a complicated question. There can be more than 100 indicators with various definitions used to assess development effects of private equity funds. However, a group of development finance institutions, with knowledge of the private equity industry and the metrics for its success in development, have narrowed the set to a library of core and optional development indicators with common definitions and consistent tracking methods.
This library provides fund managers with indicators to identify and measure positive development effects of their funds and enables a broader assessment of development effects of private equity, both qualitative and quantitative. These indicators should be used by any entity accepting investments from international finance institutions and can be used on a voluntary basis by those interested in demonstrating the value of private equity to the economic development of their regions of interest.
The following list highlights four Core Development Indicators—IRR, Employment, Environment standards and Labour standards. These Core Development Indicators should be used for any private equity fund transaction on an annual reporting basis. The 21 Optional Development Indicators can be used as needed by fund managers and institutional investors.
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