2026 Outlook: Why Emerging Markets Should Be on Allocators’ Radar in 2026

Technology as a force multiplier

Technology remains the most consistent driver of outperformance in emerging-market private equity. Its impact is most pronounced when embedded into large, underpenetrated markets where it improves unit economics.

An IFC study of emerging-market private equity shows information and technology investments delivering approximately 21 percent annualized USD returns, outperforming all other sectors in the dataset.¹² 

Across the markets we evaluate, value is being created by applying software, automation, and analytics to essential services, lowering cost-to-serve, improving pricing discipline, and expanding margins. In multiple cases, companies have continued to grow revenues while materially expanding EBITDA within 24 to 36 months by digitizing payments, insurance, healthcare delivery, and business operations.

AI increasingly sits inside this stack. Its contribution is incremental and measurable, supporting underwriting, fraud detection, workflow automation, and customer engagement rather than speculative experimentation. The strongest outcomes are driven by embedded efficiency.

A broader set of exit pathways

Liquidity remains uneven across regions, but the direction of travel is positive. Global M&A volumes increased through 2025 as financing conditions stabilized and larger transactions returned.¹³ Strategic buyers have re-engaged in financial services, healthcare, and technology-enabled business services, while sponsors have leaned more heavily on add-ons, roll-ups, carve-outs, and secondaries as core exit routes.¹⁴

In Southeast Asia, sponsor-to-sponsor transactions reached their highest levels since 2020, and secondaries remained the dominant exit route, signaling a more functional and flexible liquidity environment.¹⁵

In the Middle East and Africa, exit dynamics are also evolving in ways that support credible underwriting. Technology and consumer sectors account for a growing share of domestic deal volume, and secondary sales and strategic acquisitions in financial services and healthcare remain active, reflecting ongoing demand for scaled digital and essential-service platforms even in a more selective capital environment.⁵ ⁶ ¹⁶

Latin America shows a similar, though more uneven, pattern. Brazil in particular re-emerged in 2025 as the region’s most active M&A market by both volume and value, with activity led by technology, energy, and infrastructure. Local advisors report more than 1,100 transactions through August 2025, representing a 33 percent year-over-year increase, alongside growing participation from both regional strategics and global sponsors.¹⁷ ¹⁸

What We Expect to See in 2026

1. Capital Concentration in Profitable, Tech-Enabled Public & Private Platforms

In 2026, private equity is likely to continue favoring businesses where technology is already driving EBITDA and retention, not just future optionality.

In Southeast Asia, capital has continued to deploy into infrastructure-like fintech models, including payments, credit, and embedded insurance, even as consumer tech and earlier-stage ventures see more muted activity.¹⁵ In Latin America, healthcare and B2B software platforms with integrated operating models have continued to attract growth capital from global and regional sponsors focused on cost efficiency and value-based care.¹⁷

Across the Middle East and Africa, these themes are playing out with regional nuance. In the Middle East, rising private-equity and M&A activity in technology and consumer sectors reflects efforts to build digital infrastructure.⁵ ⁶ In Africa, capital is concentrating in payments, digital banking, and healthcare, where adoption metrics remain strong.⁷ ⁸ ⁹ 

Together with long-term return data, these patterns support the expectation that PE capital will further concentrate in tech-enabled platforms with proven unit economics, thereby widening the valuation gap relative to experimental models.

2. M&A First, Selective IPOs With Brazil at the Center

Liquidity in 2026 is likely to come first from strategic and sponsor-to-sponsor M&A, with IPOs serving as a selective complement.

Brazil has re-emerged as Latin America’s most active M&A market, recording more than 1,100 transactions through August 2025, a 33 percent year-over-year increase, led by technology, energy, and infrastructure.¹⁸ Advisors increasingly point to Brazil as central to the next emerging-market IPO cohort, citing a visible backlog of IPO-ready companies, particularly in infrastructure, energy, and scaled tech-enabled platforms.¹⁹

Recent filings reinforce this view. In early 2026, PicPay filed for a proposed Nasdaq IPO, underscoring the scale and operating maturity now present in leading emerging-market platforms. Founded in 2012, PicPay has grown into Brazil’s second-largest digital bank by customer base (after Nubank NYSE: NU), serving more than 66 million users. In the first three quarters of 2025, the company reported approximately $1.37 billion in revenue and financial income, $59 million in net profit, and $5 billion in consumer deposits.²⁰

Exits in 2026 are likely to skew toward M&A and secondaries, with IPO activity concentrated in Brazil and a small number of other emerging-market hubs where scale, sector composition, and liquidity align with public-market demand.

3. Technology-Led EM Private Equity Continues to Outperform

Historical evidence and current deal flow both support the view that technology-led emerging-market private equity will continue to outperform. Information and technology investments have delivered the highest returns across EM private-equity sectors, driven primarily by operational improvement rather than multiple expansion.¹²

Recent deal activity reinforces this pattern. Capital continues to flow toward platforms digitizing financial services, insurance, logistics, and healthcare delivery, often displacing fragmented incumbents and unlocking operating leverage. MercadoLibre’s continued expansion of its fintech and logistics ecosystem illustrates how applied technology compounds value in emerging markets over multi-year periods.¹⁴ 

Similar patterns are visible across regions: Gulf-based platforms digitizing retail and SME financial services have attracted growth investment and strategic interest as regulators push cash-lite economies, and in Africa, payments and agency-banking networks continue to gain share, with rising transaction volumes and fee income driving operating leverage despite a lower volume of new deals overall.⁶ ⁷ ⁸ ⁹

In 2026, technology-enabled growth equity is likely to remain the highest-conviction segment of emerging-market private markets because of its ability to translate structural demand into improving unit economics and defensible cash flow.

What this means for allocators

The case for emerging-market growth equity in 2026 is rooted in portfolio construction, most notably in manager selection and diversification. Emerging market private equity offers exposure to growth drivers such as demographics, infrastructure build-out, digital penetration, and healthcare access that are structurally distinct from those in developed markets.

Entry valuations have normalized, governance and operational expectations have risen, and liquidity is improving through a broader mix of M&A, secondaries, and selective IPOs. For long-term allocators, emerging-market growth equity is increasingly positioned to play a core role in diversified private-market portfolios, offering differentiated growth at a time when pricing, demand, and exit pathways are aligning.