The lion’s share of private equity funds targeted at emerging markets goes to faster growth countries such as India and China, with the two Asian giants cornering 68 per cent of the total invested value, says a study by the Emerging Markets Private Equity Association.
According to the EMPEA, which manages a global proprietary database of private equity activity across emerging markets, “China and India together captured 68 per cent of the total invested, with $5.8 billion going into China and $3.8 billion into India.”
Calculated on this basis, private equity investments in emerging market economies totalled a little over $ 14 billion in the first six months of this year.
India and China accounted for 54 per cent of the total number of completed PE transactions in the January-June period this year.
China accounted for 136 completed transactions and India 142.
Private equity funds targeting emerging markets raised $22.6 billion in the first half of this year and it is all set to reach $40 billion by the end of the year, the EMPEA said.
In the first six months, 89 funds raised $22.6 billion compared with $23.5 billion raised in the whole of 2010, putting emerging markets on track to potentially double 2010 fund-raising totals.
“Fund-raising activity in the first six months of 2011 reached almost full-year 2010 levels and we estimate that fund-raising for the full year could reach $40 billion or more, which would exceed the 2006 total,” the EMPEA President and CEO, Ms Sarah Alexander, said.
Funds dedicated to China, India and Brazil collectively accounted for 70 per cent of the capital raised between January and June 2011 compared with 50 per cent in the whole of 2010.
China-dedicated funds raised $10.3 billion in the first half of 2011 and Brazil is the target of multiple billion-dollar-plus funds this year, including two funds that together closed on $3 billion as of June.
“Western institutions are continuing to seek greater exposure to the world’s fastest growing markets and institutions in the emerging markets themselves are significantly ramping up their investment in the asset class,” Ms Alexander said.
Although the PE activity was mainly concentrated in larger and more mature private equity markets, investments took place across 54 emerging countries in the first six months of 2011, including nascent markets such as Honduras, Laos, Madagascar, Mongolia and Uruguay, the study added.