Doubts over the sustainability of many emerging markets around the world have kept many investors looking to capitalise on their existing portfolios rather than seeking and entering new deals.
However, there are signs that some of the big players in the private equity (PE) industry are starting to sharpen their focus back towards emerging markets. With so many different stakeholders moving away from emerging markets, there will be clear opportunities for those who stick around and take a chance on long-term investments in these locations.
The Wall Street Journal’s Private Equity Beat blog reports that Kohlberg Kravis Roberts & Co (KKR) are among the PE marketplace big hitters that are planning to capitalise on emerging market indecision in 2014.
The blog reports that a conference call last week to discuss the 4th quarter 2013 earnings of the company saw discussions around strategy for the whole of 2014, stating that Asian emerging markets, in particular, were now starting to look more attractive. KKR are sitting on a $5.6billion investment round they raised in Asia in 2013, so the capital is there once they find opportunities that fit the firm’s strategy.
Brazil, long seen as an emerging market opportunity but a destination many have been wary of over the last 12 months, is also being embraced by KKR. Tellingly, the firm has had an office operational in the city of Sao Paulo since early 2013, sitting out the uncertainty and now in a position to potentially cash in.
KKR’s conference call also publicised the news that their latest North American fund has closed with $9billion raised, giving the firm huge clout with nearly $16billion available to invest across North America and Asia.
The same source had reported in late January that Blackstone Group were planning to take advantage of cut price sell offs in emerging markets, with the real estate sector in Asia expected to be particularly lucrative. As many leave emerging markets through fear of volatility, conditions PE groups can thrive in and use to pick up lucrative long-term investments come to the fore.