Russian PE Weak Compared to Rest of BRIC Markets


September 26, 2013

More than USD 36.5 billion in private equity has been invested in emerging and developing markets over the past decade, and within the four major BRIC countries, it is China, India and Brazil that account for two thirds of its cross-border deals (64%) and financial commitments (63%), according to new research by international law firm Freshfields Bruckhaus Deringer.


Over the past decade only USD 2.01 billion flowed into Russian PE, whereas USD 4.12 billion flowed to Brazil, and USD 7.63 billion to India. China topped them all, attracting USD11.2 billion worth of deals. Private equity firms have largely shunned Russia in favor of fellow BRIC economies, says the Financial News, citing the Freshfields Bruckhaus Deringer report. By comparison, Russia experienced only 12 deals, or 5%, of emerging markets deals between 2003 and 30 June 2013.


Despite Private Equity’s recent propensity for focusing on China, India and Brazil, the industry’s investment reach appears to be broadening, say the report’s authors. With growth slowing in many of the original BRIC markets, PE “continues to chase strong investment returns in emerging markets”.


There is a “gradual shift in geographic interest, specifically towards Africa, Indonesia and Vietnam”. Higher growth in those markets is expect.  PE investments in emerging and developing markets over the past decade have focused on financial services companies (41% of investments), followed by retail (16%), high technology (11%) and telecoms (10%).

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