Emerging markets PE investment returning to health in 2010


Post-crisis private equity investment in emerging markets is climbing its way back to health, with $13bn put into companies for the first half of this year, up 55 per cent on the same period in 2009, according to the Emerging Markets Private Equity Association (EMPEA).

The boost in investment levels in frontier markets has been driven by an uptick in the volume of deals, up 44 per cent, and 90 per cent of this growth in both transaction volume and amount of capital invested has been tied to increased activity in China, India and Latin America.

Sarah Alexander, president and CEO of EMPEA, said, “Investment conditions in emerging markets private equity are revitalising. There are more and better quality deals in the pipelines; the continued easing of price expectations among sellers means managers have been more successful in closing transactions. Emerging market fund managers are increasingly bullish in light of stabilising markets and lower valuations.”

Fundraising levels, too, are showing signs of rebounding, with $11bn raised in the first half of 2010 versus $9bn raised in the same period last year, according to the EMPEA data.

Asian funds continue to account for more than half of the total (55 per cent), with China continuing as the leading destination for new capital. China-dedicated funds accounted for two-thirds of the 46 Asian funds that raised capital through mid-year, 60 per cent of total capital raised for Asia, and one-third of the total capital raised for emerging markets during the period.

For the first time, Brazil makes an appearance as a destination for two of the five largest private equity deals in emerging markets through the first half of the year. Investment totals made into the country increased 53 per cent in the first six months of 2010 against year-end totals in 2009, with $1.51bn put into Brazlilan companies so far in 2010, compared to $989m for the whole of last year.

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