Global emerging market private equity deal volume up 11% to $14b

DUBAI — Private equity fundraising for emerging markets returned to pre-crisis level in the first half of the year while India and China captured lion’s share of total investment, according to a new research.



By Abdul Basit

Published: Fri 30 Sep 2011, 10:38 PM

Last updated: Tue 7 Apr 2015, 5:41 AM

Fundraising activity in 2011 is expected to cross $40 billion mark as it almost reached full year 2010 levels in June, according to an industry specialist.

Global emerging market private equity deal volume jumped by 11 per cent to $14 billion from January to June, 2011, and fundraising doubled to $22.6 billion, the Emerging Markets Private Equity Association (EMPEA) said in its latest report. The two Asian giants, India and China, attracted 68 per cent of private equity capital invested in emerging markets in the first six months of 2011, with $5.8 billion going into China and $3.8 billion into India, according to research by the Emerging Markets Private Equity Association (EMPEA).

The Middle East and North Africa in total witnessed $91 million fundraising in the first half, according to EMPEA, which manages a global proprietary database of private equity activity across the emerging markets. Emerging markets saw significant gains in fundraising through June 2011, driven by continued increases in interest from the developed markets as well as greater participation from investors in the emerging markets themselves.

According to the Emerging Markets Private Equity Association (EMPEA), which manages a global proprietary database of private equity activity across the emerging markets, 89 funds raised $22.6 billion in the first half of this year, versus $23.5 billion raised in all of 2010, putting emerging markets on track to potentially double 2010 fundraising totals. “Fundraising activity in the first six months of 2011 reached almost full year 2010 levels, and we estimate that fundraising for the full year could reach $40 billion or more, which would exceed the 2006 total,” said Sarah Alexander, President and CEO of EMPEA.

The pace of private equity dealmaking in emerging markets held steady through June, with 431 deals valued at $14.1 billion, compared with 434 deals valued at $12.8 billion during the same six-month period a year prior and 856 investments totaling $28.8 billion in 2010.

“Western institutions are continuing to seek greater exposure to the world’s fastest growing markets, and institutions in the emerging markets themselves are significantly ramping up their investment in the asset class,” said Sarah Alexander, President and CEO of EMPEA.

Fundraising trends

The majority of growth in new capital continues to be driven by a handful of markets, with funds dedicated to investment in China, India and Brazil collectively drawing 70 per cent of capital raised between January and June, versus 50 per cent in all of 2010.

China-dedicated funds raised US$10.3 billion in the first half of 2011, putting China on pace to eclipse the $14.5 billion raised in 2008.

The increased pace of fundraising through mid-year was driven in part by greater participation from local investors in China and Latin America.

Unlike China and Brazil where the trend is towards localisation of capital sources, commercialisation is the theme for Africa funds, which are increasingly drawing on a more international and institutional investor base, e.g., pension funds and asset managers, and relying less on financing from development finance institutions. abdulbasit@khaleejtimes.com


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