Ep. 11: Is Sustainable Investing Dangerous?



This episode of the Portico Podcast features a conversation with Tariq Fancy — the former CIO for Sustainable Investing at the ~$10 trillion asset manager BlackRock.

He’s also the author of the delightfully thought-provoking essay The Secret Diary of a ‘Sustainable Investor’.

I reached out to Tariq after reading his essay because it raises some uncomfortable truths about the explosion of ESG-related products across public and private markets. 

While I agreed strongly with his writing about the nonsense of ESG-related investments in stock and bond markets, I maintained that sustainable- or impact-focused investors in private markets could drive meaningful change.

I also wanted to think through whether the so-called ‘greenwashing’ effect changes with scale.

I know managers whose investments are driving positive environmental and social change in some of the most underserved markets — indeed, some have been featured on the Portico Podcast.

And honestly, I worry that the asset-gathering activities of large-cap firms will not only crowd out the earnest players trying to increase human dignity, but also tarnish the idea that private markets investing can be a positive-sum enterprise.

I also worry about the proliferation of service providers bilking people with asinine accounting and compliance solutions — a phenomenon that famed corporate finance professor Aswath Damodaran refers to as the ESG Gravy Train

I remember reading an article in the FT over the summer about PwC looking to hire 100,000 people to provide ESG advice and thought the madness must stop — we’re creating entire categories of jobs that inhibit the flow of capital to productive users of financing.

And we all know that scale providers can absorb these costs, thereby entrenching their market position and reducing competition from new entrants and smaller firms.

So, you can see why I was keen to speak with Tariq about these issues, as well as the roles the public and private sectors can play in solving the structural environmental and social challenges of climate change and inequality.

But we also talk about Tariq’s nonprofit, Rumie, which should resonate with listeners of the podcast. 

Rumie provides free digital education to learners in over 176 countries, including Afghanistan where one of their big initiatives is to create more content in Dari and Pashto so that women and girls can continue their education despite the return of the Taliban.

I’d encourage listeners to visit Rumie’s website. And, if you’re a fund manager or institutional investor who’s interested in supporting the growth of a nonprofit in the edtech space, reach out to Tariq and say hello.

This podcast was recorded in October 2021.


Read The Secret Diary of a ‘Sustainable Investor’.

Learn about Rumie and sample some of its bite-sized lessons.

Donate to support Rumie’s mission.

Follow Tariq on Twitter

Read Aswath Damodaran’s post on The ESG Movement: The “Goodness” Gravy Train Rolls On!

Ep. 10: Simon Clark on The Key Man



This episode features an interview with Simon Clark, a reporter at The Wall Street Journal and the co-author of The Key Man — the summer’s must-read book about Arif Naqvi and the downfall of The Abraaj Group.

Most listeners and followers of Portico will be familiar with the background of the Abraaj story. But if you’re not, I’d recommend that you go back and listen to Episode 8.

But even more, I’d recommend you purchase a copy of The Key Man for yourself (USAUK). It’s an absolutely riveting book; it has the pace of John Carreyrou’s Bad Blood, but with an unbelievable cast of credulous characters who fell for a fantasy. 

In today’s conversation, Simon and I discuss:

  • The origins of Abraaj, some of its early transactions, and the oft-asked question: where did they get their money?
  • Abraaj’s acquisition of Aureos and how it unlocked the firm’s ability to scale.
  • The manufacture of social capital — the people and firms who testified to the greatness of Arif and Abraaj, seemingly without conducting an ounce of due diligence.
  • The Karachi Electric deal.
  • The $6B mega-fund.
  • The promise of impact investing.
  • The necessity of greater transparency in private equity.
  • And much more.

I had four pages of questions for Simon, so we clearly didn’t get to everything on my list — and candidly some of the unasked questions may be better over a pint.

But do yourself a favor and grab a copy of the book.

I hope you enjoy the conversation.

This podcast was recorded in July 2021.


Buy The Key Man |  USA  |  UK

Follow Simon on Twitter

Ep. 9: The State of EM Private Markets



One of the questions I’ve often pondered since founding this business is: is emerging markets private equity dying? 

That literally was the name of the first study I published when I launched the company in 2016, and I — perhaps naively — thought that drawing attention to some of the industry’s problems might catalyze people to action.

To put some figures on it, between 2010 and 2015, the number of growth equity funds achieving a close had declined by more than 30%, and fund vehicles greater than or equal to $1 billion in size grew from 40% to 60% of all capital raised. 

So capital was consolidating in fewer, larger managers — mostly in Asia — while at the same time the number of first-time funds holding a final close had been declining by 10% each year. And the development finance institutions were exacerbating the trends, committing to more Funds IV+ than to Funds I, II, or III.

Did things change? 

Suffice it to say that last October I put out a newsletter that reframed the question to: is EM PE dead?

So, I wanted to bring on someone who could speak to the state of EM private markets. 

That guest is Greg Bowes, Co-Founder and Managing Principal of Albright Capital — a global investment firm with expertise in special situations, infrastructure, infrastructure services, and real assets.

The label ‘variant perception’ gets bandied about quite a lot, mostly as nonsense. But Greg has a different view on EM private markets than most of the managers I’ve met, and I thought he’d be a great guide to walk through where the industry is in the summer of 2021.

In today’s conversation, Greg and I discuss:

  • Should investors even be investing in EM private markets?
  • The impact of currency depreciations on performance and whether investors should hedge.
  • The shortcomings of the traditional approach to EM private equity and whether it magnifies the impacts of adverse cross-currency movements.
  • The problem of herd behavior.
  • The importance of sound deal structuring in EMs.
  • And much more.

I’ve included some additional readings in the show notes, so dive in if you’re keen to learn more. 

I hope you enjoy the conversation.

This podcast was recorded in June 2021.


Learn more about Albright Capital at https://www.albrightcapital.com.


Portico Advisers resources referenced in this episode include:


Sign up for Portico Perspectives.

Ep. 8: The Abraaj Fiasco



I wanted to experiment with a different format for this episode and share my writings on the Abraaj fraud scandal as they were happening in real time a few years ago.

Now, for those who don’t know Abraaj, it was one of the largest — and probably the flashiest — private equity firms dedicated to investing in emerging markets. It was spearheading a big push into impact investing and was marketing a $6B fund when it collapsed in insolvency under allegations of fraud.

There are a few reasons why I wanted to revisit my articles:

  • First, the founder of Abraaj — a man named Arif Naqvi — had been fighting a battle in UK courts to avoid extradition to the United States. He lost that fight earlier this year.

  • Second, there’s a book coming out in July called The Key Man: The True Story of How the Global Elite Was Duped by a Capitalist Fairy Tale by two reporters at The Wall Street Journal — Simon Clark and Will Louch. I’m keen to bring them on the podcast to discuss the book and I wanted to provide some context in the hopes that one or both of them will join me in a few months’ time.

  • Third, the Abraaj story is a useful prism for seeing the world as it is — unvarnished. As you listen, I encourage you to think about how social capital, branding, and reputation are manufactured; how an industry that talks about due diligence did little to none; and the credulity that money buys.

So, there will be four parts to the story I share today. The first three were from the FebruaryMarch, and April 2018 editions of Portico’s much-beloved, monthly newsletter, Portico Perspectives.

The final part comes from the July 2018 edition.

As noted, this is an experiment, so please let me know what you think about the format and content. 

This podcast was recorded in April 2021.


Sign up for Portico Perspectives.

Ep. 7: Viktor Shvets on The Great Rupture



In this episode of the Portico Podcast I speak with Viktor Shvets, a global strategist at Macquarie, and the author of the deeply thought-provoking book The Great Rupture, which investigates the past and interrogates current trends to probe the question: do we need to be free to be innovative, prosperous, or even happy?

You know, when I started this company, I laid out three philosophical principles for its ethos: intergenerational equity; value creation > value extraction; and intellectual curiosity — particularly a belief in the importance of contextual and interdisciplinary thinking and open exchange. 

As you’ll hear, Viktor’s comments deftly navigate these three principles.

You may want to grab a pen and some paper to take notes for this episode because Viktor is a polymath who will engage your brain in some important — and at times, unsettling — thought experiments.

In today’s conversation, Viktor and I discuss:

  • Why he wrote a book that looks for lessons in the 12th to 15th Centuries to guide us through the next two decades;
  • Whether the ‘operating system’ of open markets, property rights, and open minds that generated prosperity in the past is in retreat — and even if it were, would it matter;
  • The confluence of the information revolution and financial revolution, and how these two forces are hollowing out the core frameworks of society;
  • The state’s usurpation of the free market and what it means for capitalism and commercial banking;
  • The prospects for emerging markets in an era of de-globalization and the importance of non-tradable sectors across EM; 
  • We even talk about Andrew Yang and the possibility that universal basic income might liberate people from scarcity, and empower them to live lives of their choosing.

But there is so, so much more.

This is a good companion to my interview with Tom Burgis in Episode 4 on The Rise of Kleptocracy, and the topic of corruption comes up a couple times in this episode, so you should check out Episode 4 if you haven’t already. 

And I’ve also included links in the show notes that will point you to a few additional readings that Viktor and I discuss, including some of my own writings over the last decade that have marinated over some similar themes.

I hope you enjoy the conversation.

This podcast was recorded in February 2021.


Learn more about Viktor and the book.

Buy The Great Rupture at AmazonBarnes & NobleIndieBoundWaterstones.


Books and articles referenced include:


Some of Mike’s writings on the themes discussed include:

Ep. 6: Investing in Frontier & Fragile Markets



In this episode of the Portico Podcast I speak with Jake Cusack, co-founder and Managing Partner of The CrossBoundary Group, a firm that unlocks private capital for sustainable growth and strong returns in underserved markets.

I first reached out to Jake about 10 years ago after he and one of his co-founders published a study on entrepreneurship and private sector development in Afghanistan.

That initial contact kicked off a series of conversations on how to harness markets and mobilize private capital in order to build businesses in frontier and fragile markets, which is the overarching topic of this episode.

In today’s conversation, Jake and I discuss:

  • His journey from the Marine Corps to co-founding CrossBoundary with a couple classmates from Harvard;
  • Why investment is a better tool for development than the provision of grants;
  • The critical role that investment facilitation plays in creating investable pipeline;
  • The rationale for CrossBoundary’s expansion from an advisory firm to a group that also manages investments
  • The suitability of the traditional private equity model in frontier markets;
  • Recruitment and how to inculcate a shared culture across a globally dispersed footprint;
  • CrossBoundary’s recent initiative to open source its approach to project financing mini-grids;
  • And much, much more.

There are loads of links below that will take you to the articles, books, and reports discussed in the episode, as well as other resources of interest.

These include CrossBoundary’s research studies with IFC on private equity in fragile and conflict-affected situations in Sub-Saharan Africa, their recent report on scaling up investment in Africa in the Covid-19 era with the Tony Blair Institute for Global Change, and many others.

If you’re interested in their open-source initiative for mini-grids, the team will be sharing term sheets for the project finance contracts, as well as a template model, on 15 February — so take a look and take action if this is in your area of interest.

This is a great companion to my interview with Roger Leeds in Episode 2 on Private Equity & Development. So, if you missed that interview, I invite you to visit the archive and give it a listen.

And if you’re feeling motivated after listening to Jake, then navigate to crossboundary.com/careers to peruse their job openings.

I hope you enjoy the conversation.

This podcast was recorded in January 2021.


CrossBoundary resources referenced in this episode include:


Books and articles referenced include:


You may also find some of Jake’s writing below:

Ep. 5: Weijian Shan on Leverage and Turnarounds in Asia



In this episode, I speak with Weijian Shan, the chairman and CEO of PAG — a leading Asia-focused alternative investments firm with ~ $40 billion of assets under management.

Prior to PAG, Shan was a co-managing partner of TPG Asia (formerly known as Newbridge Capital).

It was a real honor to have Shan on the podcast, as his life story is remarkable.

If you haven’t read his memoir Out of the Gobi yet, I heartily encourage you to do so. It’s an extraordinary book that recounts Shan’s experiences during the Cultural Revolution — particularly the six years he spent doing hard labor in a re-education camp — and the transformative impact that the normalization of U.S.-China relations and Deng Xiaoping’s economic reforms had on China generally, and on Shan in particular.

And he’s just written a new book called Money Games, which details the rescue of one of Korea’s largest banks on the heels of the Asian Financial Crisis.

I reached out to Shan after finishing Money Games because — in addition to providing one of the few narratives to detail a private equity transaction from sourcing through exit — I think his book offers tremendous insights into the art of private equity deal-making, and I wanted to explore some of the themes it raises.

In addition to his books, Shan and I discuss the importance of stakeholder analysis when structuring private equity investments; whether there is a problem of too much debt in the Chinese economy; SOE reform, and the prospects for China’s economic rebalancing toward domestic consumption; the institutionalization of private equity in Asia; and, his advice for younger people who wish to pursue a career in private equity, among other topics.

Shan’s thoughtful comments prompted me to rethink some of my own analyses and assumptions. I really enjoyed this conversation, and I hope you will, too.

This podcast was recorded in December 2020.

Ep. 4: The Rise of Kleptocracy



In today’s episode I speak with Tom Burgis, an investigations correspondent with the Financial Times, and author of two courageous books: The Looting Machine: Warlords, Tycoons, Smugglers and the Systematic Theft of Africa’s Wealth and the recently released Kleptopia: How Dirty Money is Conquering the World.

I strongly encourage you to buy copies of Tom’s books, read them, and share them with others.

Why?

Because as you’ll hear in this podcast, the themes his books cover constitute an existential threat to democratic institutions and governance — and the rule of law — globally.

They’re absolutely riveting yarns, full of intrigue and consequences.

And my hope is that if more people read Tom’s work, then we’ll stand a better chance of resisting the precipitous slide into kleptocracy that endangers us all.

Courage is contagious.

My discussion with Tom covers:

  • The dots connecting The Looting Machine and Kleptopia.
  • The story of Mukhtar Ablyazov — a Kazakh billionaire whom some say is a freedom fighter, some say is a fraudster, and some say maybe he’s both.
  • The complicity of U.S. and UK professional services firms in facilitating the activities and laundering the funds and reputations of kleptocrats.
  • Some mistaken assumptions behind the ‘convergence’ thesis.
  • How citizens can keep Kleptopia in check and revivify democracy.
  • John Kenneth Galbraith’s notion of ‘the bezzle’ and where ‘the bezzle’ is biggest now.
  • And, what the rise of Substack and the proliferation of journalists going solo or direct-to-consumer imports for the future of investigative journalism.

I’m fired up about this episode, and I hope you will be, too.

If you enjoy the Portico Podcast, please share it with friends, colleagues, and / or your connections on social media. Thanks!

This podcast was recorded in November 2020.

Ep. 3: Fintech & Financial Inclusion



In the third episode of The Portico Podcast I speak with Monica Brand Engel — a co-founding Partner at Quona Capital, a venture capital firm focused on fintech for inclusion in emerging markets.

If you’ve looked into EM fintech, you’ve probably come across Quona and their portfolio companies.

For example:

  • Sokowatch in East Africa, a working capital provider and last-mile distributor of fast-moving consumer goods to informal retailers;
  • Coins in the Philippines, a mobile, branchless, blockchain-based platform that provides unbanked and underbanked customers with direct access to basic financial services (and which was acquired by Go-Jek in 2019);
  • Or Konfio, a digital banking and software platform for SMEs in Mexico, which received a $100m investment from Softbank as well as a $100m secured credit facility from Goldman Sachs last year.

I was excited to get Monica on the podcast because she has built a career in two of the most compelling themes around: financial inclusion and financial technology.

Our discussion opens with her walking us through her career trajectory. We then talk about the convergence between philanthropic and commercial investment across emerging markets; the commonalities and idiosyncrasies across the markets in which Quona invests; the quality of fintech entrepreneurship in EM; the prospects for technological and business model innovation to migrate from emerging markets to the United States and Western Europe; and the biggest obstacles fintech startups encounter as they attempt to scale, among other topics.

I hope you enjoy our conversation.


This podcast was recorded in October 2020.

Ep. 2: Private Equity & Development



When I decided to launch the podcast, I wanted today’s interviewee — Roger Leeds — to be one of the first guests. And I wanted to explore the theme of private equity and its role in private sector development in emerging and frontier markets.

A bit of background may be helpful.

15 years ago or so I was working for the Department of Defense on strategies to address a variety of intractable issues.

For one such issue, I was the youngest member of an interagency team working with senior civilian and military commanders in Baghdad and Kabul on interior ministry and police reform.  U.S. policymakers had dubbed 2006 the “Year of the Police,” but as the year passed by, the results trickled in; and I grew increasingly skeptical about the ability of the United States to effect positive and enduring change in Iraq. 

Moreover, when viewed in a broader perspective of state-building, counterterrorism and U.S. national security objectives, I became convinced that the only viable long-term solution was to drive investment into the region, create jobs and, over time, generate licit opportunities for people to feed their families.

So, it was off to grad school to study economics and finance, where I serendipitously learned about something called private equity and how it could drive private sector development in emerging markets.

Roger Leeds taught that course. He had a profound influence on me when I was a student at the Paul H. Nitze School of Advanced International Studies (SAIS), and his positive influence endures to this day.


Roger worked as an international financier for 25 years before joining the faculty at SAIS. After working as an investment banker at Salomon Brothers, Roger was at the forefront of the development of the emerging market private equity industry, not only as a senior staff member at the International Finance Corporation, but also as a private equity investor, and as the co-founder of the Emerging Markets Private Equity Association (EMPEA).

Roger is the author of Private Equity Investing in Emerging Markets: Opportunities for Value Creation — the seminal book on the topic, which I encourage every listener to pick up and read.


In our discussion today, we talk about the structural drivers that make private equity a useful investment strategy in emerging markets, and how it is qualitatively different than the leveraged buyout model that is prevalent in the United States and Western Europe.

We also talk about the hollowing out of mid-market PE funds in emerging markets and why it’s a problem, the story of local currency PE funds in China, and his work with Francis Fukuyama on the Leadership Academy for Development, among other things.

I hope you enjoy our conversation.

This podcast was recorded in July 2020.


Buy Roger’s book directly from the publisher, or via Amazon, Barnes & Noble, IndieBound, JD.com, or wherever fine books are sold.