Emerging markets private equity slows in line with global slump

A total of 196 private equity funds focused on emerging markets raised $22.6bn in 2009, a 66 per cent decline from the record-breaking $66.5bn raised by 210 funds in 2008.  The fall in new fund commitments was on par with an estimated 65 per cent decrease in fundraising in developed markets.

Fundraising for emerging markets-focused private equity will remain tough this year, too. Sarah Alexander, president and CEO of EMPEA, said, “2010 will still be a difficult year for fundraising. The majority of investors expect to grow their private equity exposure in emerging markets over time, but a significant portion of capital is locked up in older vintage buy-out funds that have yet to produce significant distributions. In the near term, domestic investors and development finance institutions will play a pivotal role, in particular as anchor investors for first-time funds.”

Emerging markets captured 26 per cent of global private equity investment, versus only seven per cent in 2004, with $22.1bn invested across 674 deals. Falling transaction sizes contributed to a 54 per cent drop in total investment value, while the number of private equity transactions fell by only 11 per cent in 2009.  This compares to a 79 per cent drop in value and 50 per cent fewer deals in developed markets.

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