« Private market investors neglect risk in rush for returns »
Hugo Cox | AsianInvestor« The recent scandal involving Adani Group and Canadian pension fund CPDQ exposes flagging standards as investors rush for private markets across emerging markets in Asia.
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François Dauphin, who leads the Montreal-based Institute for governance of private and public organisations, identifies a concerning trend.
He notes the investors’ due dilligence is suffering under pressure to deploy capital quickly and achieve returns, often in unfamiliar investment vehicules.
« In recent years, there has been an abundance of capital from private funds or institutional funds looking for private investments opportunities to improve their total returns, » Dauphin told AsianInvestor.
« The appeal of private placements lies in the potential of high returns, but the level of risk associated with such projects is also necessarily higher. This is all more true when distance does not allow for direct monitoring. »
Numerous institutional have rushed past standard risk assessment procedures in eagerness to secure leading investment positions, he added.
« This compromised approach to due dilligence has inevitably, led to adverse outcomes, as evidenced by the current situation in India. »