The Principles for Responsible Investment has recently published a very interesting report “Who Invests and How? Unlocking and mainstreaming institutional flows to EMDEs.” It is one of the clearest maps of who actually invests in emerging market and developing economies (EMDEs). Yet there is a curious absence in this report—private equity and private debt. Here I will focus on why I think they have a very important role but first let me summarize foundational framework of the report. In a step to improve the understanding of ‘nstitutional investors the framework classifies them into five archetypes based on their mandates, constraints, and realistic capacity to deploy capital in EMDEs.

1. Domestically focused institutional investors: Institutions whose main business is their home domestic market, or where they collect and manage assets from members and clients in a domestic market.
2. Commercially global institutional investors: Institutions with a broad international client and operational footprint with a global mindset.
3. State-aligned large-scale institutional investors: Institutions that manage substantial public or national institutional capital with a global investment reach.
4. Highly regulated retail-focused institutional investors: Institutions that are usually nationally or regionally focused. Their operating model services and reflects the needs of retail investors.
5. Nimble entrepreneurial institutional investors: Bespoke investors with the strongest risk and liquidity tolerance. They have a strong service and values-oriented approach.

This typology matters because it sharpens a fundamental question: when policymakers talk about mobilizing the roughly $2.4 trillion a year needed for climate and infrastructure investment in EMDEs by 2030, are we even talking to the right parts of the investor universe? Estimates from the IEA and World Bank put annual EMDE clean energy and related infrastructure needs firmly in that range.

Andrea Webster, Consultant to PRI and Ambassador at the World Benchmarking Alliance | Andrea Webster

Speaking to Andrea Webster, who advised the PRI on these archetypes, I asked her how realistic she thought it was that these numbers were achievable. She is surprisingly optimistic against what is usually a pessimistic backdrop. “The money exists in the system, but it needs clearer mapping on which type of investors, assets, and channels the money can flow through. That way we move from sweeping statements to much more targeted actions and incentives. Tapping into the herd mentality within mainstream finance is how we hit these big numbers.”

Her optimism is further supported if one looks beyond the public markets and into private equity and private debt. Data from the Global Private Capital Association (GPCA) show that private capital investors deployed on the order of $90–100 billion into emerging-market private equity and venture capital across Asia, Latin America, Africa, Central & Eastern Europe, and the Middle East in 2023, with additional capital flowing into infrastructure, private credit, and real assets. That’s material, even if still modest relative to the total need. Private credit investment in those markets has been growing even faster. Recent GPCA and Bloomberg figures put emerging market (EM) private credit deployment at around $11 billion annually, nearly doubling year-on-year from a low base as specialized managers scale up their platforms. Globally, private credit assets have climbed from around $1 trillion in 2020 to roughly $1.5 trillion today, with forecasts from Preqin and others pointing toward $2.5 trillion or more by 2030. Private markets are hardly niche anymore.

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