Frontier markets investing looked nothing like this in 2002, Henry Gabay has watched every shift
When Henry Gabay co-founded Duet Group in May 2002, starting the firm with $10 million in capital, the phrase "frontier markets" barely existed as an institutional asset class. It was 8 months after the September 11 attacks. Emerging markets themselves were still treated by much of the investing world as a single, undifferentiated bucket. The more granular distinctions that later became standard, separating a market like Poland from one like Ethiopia or Moldova, were only beginning to take shape. Two decades on, frontier investing has become a recognised, if still niche, institutional category, and Gabay's career offers an unusually direct window into what has and has not changed.
Frontier markets investing has evolved significantly since Henry Gabay co-founded Duet Group in 2002, as emerging economies attracted greater institutional investment.
In 2002, institutional interest in African and post-Soviet frontier economies was thin, and dedicated funds targeting those regions were rare enough that Duet's early public-markets strategies had relatively little direct competition. The scale of the shift since has been documented independently: in the early 1990s, a mere dozen Africa-based private equity funds managed a combined $1 billion, according to research published by Boston Consulting Group; by the time Duet launched its roughly $300 million Sub-Saharan Africa private equity division in 2014, that figure had grown to more than 200 funds managing upwards of $30 billion. A broader run of transactions across the region that year, including Duet's own Nigeria, Ghana and Uganda deals, was covered by trade press as part of what Private Equity International's headline called a promising stretch for African private equity, rather than a series of isolated, contrarian bets. Duet's own assets under management, meanwhile, had grown to roughly $5.5 billion at their peak, a scale that would have been difficult to imagine for a frontier-focused platform at the time of the firm's founding.
Gabay's early deals, leaned more heavily on relationships built from scratch, including endowment fund TIRET Group's role alongside Duet and UK investor Vasari in the 2012 Dashen Brewery transaction, one of the earliest and largest private equity deals completed in Ethiopia at the time. In parallel Gabay was hiring teams to serve the institutional markets such as “Duet Mena” in Duba who managed frontier markets equities for multiple Sovereign Wealth funds or “DRC” in London, who became overnight one of the most prominent player in the European Mezzanine real Estate Debt Space.
By the 2010s, markets that had offered Duet a relatively uncrowded field a decade earlier were attracting a wider set of institutional investors, sovereign wealth vehicles and regional funds. That has generally improved pricing discipline and governance standards across target companies, but it has also compressed some of the valuation advantage that came with being an early mover. Duet's 2018 hiring wave, which brought in investment professionals from Temasek, Standard Chartered, Credit Suisse and The Abraaj Group, according to Private Equity Wire, reflects the same shift: senior frontier-market talent that was scarce and dispersed in 2002 has since consolidated into a smaller number of specialist firms, available during periods of industry contraction and contested when demand for it rises.
Some of Duet's transactions point to a maturing exit environment too. When Spanish energy group Naturgy sold its Moldovan electricity distribution business in 2019, the buying side included both Duet Private Equity and majority joint-venture partner EMMA Capital Group, reflecting the kind of strategic and financial buyer interest in regulated infrastructure that largely didn't exist in transitioning economies two decades ago. But frontier private equity exits, broadly, remain slower and less liquid than exits in developed markets; that hasn't changed as fundamentally as fundraising or deal sourcing has.
The scale of that maturation shows up in the industry's own recent data. Africa-focused fund managers held an estimated $10.3 billion in uncommitted capital at the close of 2024, private equity deal volume rose 51% year-on-year and exit activity increased by nearly half, according to AVCA's 2024 African Private Capital Activity Report. None of that infrastructure, the specialist fund managers, the standardised annual reporting, the tracked exit data, existed in any recognisable form when Duet was founded in 2002.
What has not changed at all, in Gabay's telling, is the underlying need for patient capital and direct, hands-on governance as well added value with it’s business netwrok. Duet's board seats, at Dashen Breweries from 2012 to 2018 and majority stakes in multiple deals, reflect an operating model built around active involvement rather than passive allocation, and that model has remained constant even as the surrounding market infrastructure has grown more sophisticated. More institutional capital and better data have not eliminated the need for an investor willing to sit on a board in Addis Ababa or restructure a utility acquisition in Chișinău. If anything, as more capital has entered frontier markets, the advantage has shifted toward investors who can still do that work directly, rather than those simply writing larger cheques into a more crowded field.
