According to an article in Private Equity International,LP’s are increasingly using local managers to access emerging markets and some of the big global funds are losing out as a result. The trend was spotted by PEI’s Research & Analytics division.
The numbers show that in the two years immediately after the financial crisis, global funds raised about the same amount of money for investment in emerging markets as local managers in those countries (USD 34 billion vs USD 38.6 billion in 2008; USD16.5 billion vs USD 16.4 billion in 2009).
However in both 2010 and 2011, global GPs raised USD 18.7 billion for emerging market funds – while local GPs in emerging markets raised much more, USD 31.4 billion and even more at USD 56.3 billion, respectively . The gap narrowed slightly last year (USD 32.3 billion raised by the locals, USD 20.8 billion by the globals), said PEI.. The article contains several examples of high profile global funds that have had difficulty raising capital as a result of this trend.