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Fundraising Stable, Dealmaking Down in Emerging Markets

by

October 4, 2012

The latest statistics from the Emerging Markets Private Equity Association (EMPEA) show that private equity fundraising is on track to match 2011 levels in the first half of 2012.

 

It is the larger more established fund managers that have been successful closing new funds, so-called mature platforms, including the largest pan-emerging markets fund raised to date, Capital International’s USD 3 billion sixth fund and two of the largest Turkey funds ever raised.

 

“For institutional investors seeking exposure to high growth markets but lacking the resources to source and manage multiple fund relationships, mature platforms with large funds present an efficient option,” said Sarah Alexander, founding President and CEO of EMPEA, in the report.

 

As for dealmaking volumes, the emerging markets are maintaining a 15% share of global totals, but the number of deals done was flat. Transactions in China and India declined, while transactions in other emerging parts of the world increased.

 

The total invested capital fell by 34% and deal sizes on average dropped by 22% due to fewer USD 100 million-plus deals.

 

The cause of the decline in dealmaking is attributed to legal and regulatory uncertainty and anticipated currency depreciation. PE fund managers are looking to listed markets for dealflow.

 

EMPEA’s data reveals that five of the fifteen largest emerging market private equity deals in the first six months of 2012 were PIPE deals, or private investment in public equities. That is five times the number of PIPE deals done in 2011.

Dealmaking may be down in China and India but China still accounted for 40% of total investment and 30% of transactions in the study regions. Latin American markets including Brazil, and Emerging European markets including Turkey drew 12% and 8% of deals, respectively.

 

Sub-Saharan Africa drew 7% of deals, while Russia accounted for 5% of transactions and the MENA markets represented 4%. (Images source: EMPEA)

 

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