Asian equity buyouts monitored

Is there a CSR side to private equity in Asia?

The surge of private equity investments in India and China is yielding fantastic returns for investors, but critics worry that the lack of accountability of these type of activities could also lead to social and environmental disaster.

by CSR Asia Weekly
Last Updated: 23 Jul 2013

In 2006, India and China received $2.21 billion and $1.72 billion worth of private equity and venture capital respectively - the largest recipients in Asia after Japan. The lure of these emerging markets follows their very high rates of return on investments, currently averaging at 21% in India and 9% in China.

On paper, private equity could help local companies "scale up and get access to the knowledge and markets they seek," says Shankar Narayanan, head of operations for Carlyle Group.

But international Swiss-based federation of unions IUF says that the impact of such investments on employment is often "catastrophic". Many of these funds also operate below media radar, so little is known about the impact of their activities.

"The top global buyout funds now control more overseas assets, and employ more workers than the traditionally ranked leading transnational companies," observes IUF. Yet, little is known about their activities and their impact.

In a bid to promote more transparency and accountability, the IUF set up Private Equity Buyout Watch, in the hope that companies such as Kohlberg Kravis Roberts and Co, which has invested in Toys 'R' Us - a signatory of the ICTI CARE programmes which oversees social and environmental compliance in the toy manufacturing sector - will disclose more about their CSR credentials.

Private equity buyouts in Asia: a plague of locusts?
Stephen Frost
CSR Asia Weekly Vol 3 Week 16
Review by Emilie Filou

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