There are a number of common misconceptions related to investing in emerging markets.

‘There are many undervalued situations’
Low multiple investments in established profitable businesses are actually in short supply and are keenly pursued by private equity funds and local investors. Instead, Gryphon’s goal is to identify the exceptional entrepreneur or management team with a growth-led project in an undeveloped sector that is geared to the growth of the economy. In this area there are many projects with little investor competition.

‘Capital is the short commodity’
In a typical emerging market, capital is not a short commodity but is concentrated among powerful family or state groups. The challenge for Gryphon’s entrepreneur clients and investors is to identify an unexploited market opportunity and invest where there is a clear advantage over local capital. This typically occurs in sectors where there is little or no pre-existing investing experience of that market segment in the country.

‘Emerging markets are high risk’
Emerging markets are not necessarily high risk but, because of limited transparency, local capital has an initial knowledge and political advantage. Where appropriate, Gryphon may work alongside high-quality local groups. In addition, stand-alone entrepreneur-led ventures can be less risky than in developed markets as they typically address very large, rapidly growing consumer markets and are often the first, possibly only, mover.