Drop in Buyouts in Emerging Markets


September 19, 2013

There was a dramatic drop in private equity-backed buyout deals in emerging markets, according to Preqin’s Buyout Deals Analyst. So far this year there have been 217 transactions, valued at an aggregate USD 11.9bn, a 33% decrease in the number of buyout deals and a 41% drop in the aggregate deal value compared to last year.


Earlier this year, Preqin published a survey of investors in Emerging Markets that predicted a decrease investment in the next 12 months. The year is not over but it looks like the survey was accurate in forecasting a decrease, although not necessarily the size of the decrease. (See chart sourced from Preqin).


Emerging market buyout deal size has been steadily declining in the past couple of year. Preqin say there is a 27% decrease in the average size of buyout deals in emerging markets from 2010 to present, compared to a steady increase of 21% in average size for buyout deals globally.


Today buyouts in emerging markets represent 12% and 6% of the Global total number and aggregate value. The largest deal announced in the region this year was the buyout of the South Korean insurance unit of ING by MBK Partners, valued at USD1.65bn.


China and South Korea have reported the largest proportion of deals this year to date, with buyout investments in both countries each representing 25% of the value of all private equity-backed buyouts in emerging markets.


Investments in India account for 18% of the total value; Indian buyout deals also represent the largest proportion of buyout deals in emerging markets by number, at 41%.


The hot sectors are business services with 22%, closely followed by industrials, which have accounted for 20% of buyout deals, according to Preqin.

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