Cold Approach Frontier Market LMM Teams

I will keep this short.

I am a 19 year old economics student, junior year. I have grown increasingly unsatisfied with the content that has been taught to me in college. I have great and specific ambitions for the future, and have realized that the skills college is giving me are not relevant to these. It regrettably seems increasingly an industrialized conveyer belt to produce "industry ready graduates", optimizing our skillsets for standard 9-5 corporate roles and "sensible" careers like analysts. There is nothing wrong with this at all, and is generally a far better path for most people. However I am incongruent with these expectations and this lifestyle to my core, and seek either a far more adventurous form of merchant-banking or I'll probably go AWOL to the French Foreign Legion.

I have grown evermore fixated on the possibilities of LMM private equity in emerging markets, and have researched extensively a number of firms in Africa/Eastern Europe. I am partial to the notions of underdeveloped markets allowing for genuine growth opportunities and enormous potential margin expansion at the sub $10mm range, with heavy hands-on operation/monitoring and a far less predictable business environment. Enormous risk, enormous reward.

I desire to cold-approach these firms in their offices (Africa, Eastern Europe etc.) I have a long list and have tailored my approach exclusively for each firm. These are small teams, barely more than a dozen bankers in each, hopefully meaning I have a better shot with them. I am hoping to get at least an informal position in which I can observe and do odd jobs and support to whatever capacity I can afford with my inexperienced knowledge, with the hope of learning faster and harder than anywhere else and gaining first-hand exposure to the deals process, the problems that arise and strategies used to overcome them. I will work without pay for the first month while I prove myself if needed for a shot.

I need to do this in these firms/markets as I know that I don't have a chance with this approach in established, Western markets (believe me, I've tried) in the usual big banks or even smaller firms with recruiting cycles and enormous teams and deals. 

I don't want to waste time going the round-about way by spending years gaining "experience" by proxy through less risky companies if I can avoid it, and want to assault this head on, balls to the wall and risk it all. At risk of sounding presumptuous, this is what I want to do. I am intensely focused on it, I want to start as soon as possible, as direct as I can. I have no interest in maximising optionality or exploring other options, so the standard paths are unappealing in this regard.

I have taken multiple courses on WSO, including the PE Deals Process and the LBO course. I have watched countless videos on the topic and read extensively. I am restless and impatient to strike out and do this for real. I am willing, want to even, make mistakes and hit my head on every wall if needed until I smash my way through one. This has been my sole focus, and I have even rejected all the sexual advances of women at my dorm to focus on this. I have a tailored suit, good gym body and enormous confidence in myself. If this is possible I will make it work.

Does anyone here know anyone who has done anything similar, or have any advice at all regarding this course of action? Am I correct in the hypothesis that smaller teams in these unconventional markets may be more open to unorthodox applicants such as myself? Would I be accurate in saying that I could get more relevant exposure, more quickly in these less structured environments? Lastly, any insight on these markets/sectors/countries would be enormously appreciated.

I appreciate any input, even if from the perspective of small US/Western firms or anything. I have supreme confidence in myself, but I willingly admit that many here know far more than me here and am eager to learn as much as possible from you all, like a sponge. Especially you @m_1", I have bookmarked many of your posts. You are exactly the sort of mentor I would wish for in this situation.

Thank you all.

Most Helpful

Interesting to see that students are still dreaming of emerging markets...I was one of them. Most of my previous internships as well as my current position are EM-focused. Here's some brain food about emerging/frontier markets that I wish I knew earlier

1. You need a geographic focus

EMs differ greatly from one another in terms of economy, politics, culture, and population. There are no "EM investors", only investors focused on a specific region, i.e. Sub-Saharan Africa, Latin America, Eastern Europe, Central Asia, etc. Those are entirely different places with different business landscapes and therefore different rules of the game. It's pretty much required to be able to speak the local language, because most of those people barely speak English, especially if we're talking about LMM - you're not going to be able to navigate frontier waters if you look like a tourist. This bring us to our second point

2. Relationships are extremely important, even more than in developed markets

Developed markets have auction processes and generally well-oiled and deep private capital markets. EMs have none of that, so each deal (and even more so at the LMM level) has to come from proprietary sourcing. That's why the best EM investors usually are locals with Western education and Western capital. That's also why business and politics are intricately linked in EMs

3. You better like boring businesses

You may have heard about the "missing middle" - EMs are mostly composed of massive state-backed/well-connected conglomerates and small businesses. Tech investment remains at the pre-seed and seed stage and only in very specific cities. If you want to do LMM, you better absolutely love sectors such as natural resources, basic materials, agriculture, food production, i.e. anything capital-intensive. Think cement factory.

4. You better like pain

Many here can comment that LMM in developed markets as a PE investor is an absolute pain in the ass. LMM in EMs is ten times worse. Your due diligence will be unsatisfying. Management will be untrustworthy. Employees will be slackers. Accounting, tax, supplier & customer management will be an absolute headache. You're dealing with extremely unsophisticated counterparties here.

5. EM PE is not DM PE

PE investing in emerging markets is very different from PE in developed markets. LBOs are virtually nonexistent because credit markets are nonexistent: banks won't lend to you or are way too expensive, and credit funds won't lend to a random LMM company and would be even more unwilling to underwrite an LBO. That's why PE deals in EMs are nearly 100% equity. Further, good luck finding exit liquidity. There are very few sponsors operating in those markets, so unless a strategic is interested you're going to sit on your asset for a long time, and should assume a 10-15 years holding period.

6. EM PC has produced better returns than EM PE

Private credit / structured equity has produced better returns over the last two decades because it focuses on downside protection, and you're going to need a whole lot of downside protection if you decide to operate in those markets. Convertible debt can help get exposure to some of the upside but generally speaking you will absolutely need to focus more on the debt side rather than vanilla equity investment. Many PE funds operating in EMs have pivoted toward private credit following disappointing returns.

Recommend reading "Frontier: An Unauthorized Biography of the European Emerging Markets"


First of all, thank you very much for taking the time to impart your knowledge and well written answer. It means a lot to me. I have bookmarked your answer for future reference. Everything you have said utterly excites me. If what you say is true, which I am sure it is, there is absolutely no doubt that emerging markets are where I must base my career.

1. Though I am interested in virtually all frontier markets by virtue of the many reasons you have described, I do have one particular focus. I am from a specific underinvested frontier market, which is for many personal reasons where I wish to move back to and work. This market in particular is what ignited my passion for this side of private equity, having visited it and been altogether enchanted by the daring and whirlwind chaos of the business market, its fly-by-night dealers and ingenius characters, and I feel the whispered possibility for a great man to reshape the entire economy, with enough vision and skill.

I also have some promising connections to capitalize on if successful. In short, my family back there has some connections that would give me an immense head start if I can play my cards right. This is something I am working and focusing on. So in this regard, I shouldn't face any insurmountable difficulties in my main region of interest. If anything, I will stand quite well there. Now to the markets further afield than my home country, full of even more difficulties and greater opportunities and potential (the Caribbean, Africa, the Congo, Sudan and Somalia, or sub-Saharan Africa and the Mekong subregion), I am perhaps not as advantageously positioned but to its potential completely enthralled.

2. One of the main attractions to me is the less developed deals processes and in particular proprietary sourcing. It sounds as if there is inherently more initiative required in its pursuit and more brilliant nuances and factors in its success that can be learnt and utilised.

The political influences will be extremely interesting as well, the intersection of third world governments and major infrastructure projects for example (say a bulk liquid seaport in West Africa) would add fascinating dynamics to all aspects of the work, and potentially provide opportunities to make advancements and exposure to higher levels beyond that of any other sector of private equity. Given that my thought processes and problem solving can be at times, unconventional, a more unpredictable environment heavily relying on relationships and initiative in risk taking and strategic politics is an exhilerating prospect to me. Certainly, it is infinitely more appealing in its dynamicism than the more orderly and structured business worlds of the West. Again, from what little that I know.

Ultimately I see this as being without limits, a ceiling or floor. I can either attain disproportionately soaring success or suffer cataclysmic failure. It all depends on me, and my decisions. I like that. I want that.

3. Perfect, perfect, perfect. Heavy industry, agriculture, infrastructure, manufacturing, utilities and natural resources are the main areas of private equity that interest me, and part of the reason these markets appeal to me. These sorts of asset classes seem to be less accessible at these price levels in developed markets, oversaturated in hordes of MM or UMM LBO firms with too little differentiating themselves from too many competitors, clawing for the same deals and driving up prices in a most persuasive seller's market. I have practically zero interest in technology or tech companies too, so I am more than happy to operate in environments where these standard industries take centre stage.

See this for my dream sort of business:…

4. I won't say that I am particularly excited for the prospects of extreme difficulties in these departments, but it is far from a dissuading factor. Instead it all sounds to me like brilliant opportunities to improve operating efficiency and add enormous value once management and operations are professionalised across the board. Back in my home country, this is quite common. In many of these SMEs the founders are anyone, from CEOs to lawyers or drivers or tradesmen or cleaners. It works well to a certain extent, but eventually reaches a point where they need professionals to take the company forward. This is where I want to come in, and given the business plan is generating enormous growth from this point of business development, these difficulties in documentation and inefficiencies are not only expected, but in some ways a good sign. This is true private equity, which is about taking a rough gem and polishing it into a diamond that can be sold. Sometimes literally. And this is what I am thrilled at the prospect of, turning businesses into corporations whilst maintaining business agility and cohesion, without the suffocating beaurocracy and decisionmaking that slows true growth.

Simply put, I see enormous, and real potential in these markets. But nobody wants to take the risks, or have the risk tolerance or appetetite to come on over and invest, rolling up their sleeves and fighting in the trenches with the entrepreneurs to find - or make - real, genuine and dazzlingly lucrative growth. Of course, there are other factors (cultural barriers and connections) which again, I surpass. This takes a particular mindset. I have it.

No more financial engineering and driving growth through leverage and debt, passing around overvalued assets in an inflated market like a hot potato until the next crash. You want real downside protection? Base your profits on generating true growth in absolute terms, and couple that with a daring and intrepid team of cowboy capitalists with exhaustive knowledge and connections within their markets. This is what I believe, and this is the only banking I want to be a part of.

 5. Again, brilliant and exciting. I'm sure you've already gathered my opinion (though I admit inexperienced) on developed market private equity. Banks won't lend because it's too risky? Well they will eventually once they see the proven returns. I am convinced the potential is there, it's simply a question of if it can be capitalized on. That's why I want to learn from people like you, I can't do it yet because I'm a simple college student, but I am fervently determined and convinced I will ace it if given a shot to learn from those who know more and are willing to take a chance on me.

I am uninititated in the intricacies of dealings in these markets in regards to exit procedures and similar, which is another facet I very much hope to learn by taking this approach with firms currently operating in this field.

6. I have not heard mych of private credit, but it sounds very interesting. Thank you for opening my mind to it, I will endeavour to read as much as I can on it. I have already found an 80 page report by the world bank on the "missing middle" and am in the process of reading through it.

I have already ordered the book you have recommended, you have read my mind. That synopsis is the exact, precise nature of my dreams and ambitions that it is uncanny. What position do you currently hold, and how do you get to these positions that focus on emerging markets, specifically what qualities do the employers prefer compared to mainstream bankers? Lastly, what would your personal reaction be to someone doing what I have outlined, approaching your team and positing such a scenario with such confident vigour? Would they be laughed out of the building and blacklisted, or would the team be interested in such an unorthodox happening, or somewhere in the middle?

Thank you again.


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