4.18.18 #EMPEAMemberNews: Actis exits Ostro Energy to India-based clean energy power producer, ReNew Power. CPP Investment Board invested US$247 million to support ReNew’s acquisition of Ostro, bring CPPIB’s total investment in ReNew to date to US$391 million. Actis commited US$180 million to establish Ostro Energy in 2014. ReNew Power will incorporate Ostro’s assets, which span six Indian states, into its existing clean energy portfolio. Read more here.
4.17.18 Indonesia has the 4th largest emerging middle class in the world and the 10th largest economy by purchasing power parity yet, its market for private investment remains under penetrated. EMPEA held a bilateral meeting with Indonesia’s Minister of Finance Sri Mulyani Indrawati on the sidelines of the ASEAN Finance Ministers’ meeting in Singapore on 5 April.
At the meeting, Minister Sri Mulyani informed the EMPEA delegation that she looks forward to a broader dialogue about the steps Indonesia can take to spur greater investment. In particular, a better understanding of the private sector’s of risk appetite for investing in Indonesia and the current perceptions of risks would allow the country to tackle any stigmas surrounding the Indonesian investment climate. The Minister particularly welcomes pragmatic recommendations for increasing private investment in particular sectors of the economy.
Minister Sri Mulyani also shared with the EMPEA delegation the government’s plans to undertake a benchmarking analysis of tax regimes in order to improve upon Indonesia’s tax code to attract greater foreign investment. EY, an EMPEA Leadership Circle Member, presented its paper on key tax issues facing investors.
The EMPEA delegation discussed the ways emerging market funds incorporate environmental, social and governance (ESG) improvements into their investments, as well as the growth of impact investing. The Minister recognized how this could help Indonesia better achieve the United Nations’ Sustainable Development Goals (SDGs) and was interested in learning more about its application and implications.
4.4.18 #EMPEAMemberNews: NBK Capital Partners and Gulf Capital invest in Jordan-based garment manufacturer & distributor Classic Fashion Apparel. The investment will allow CFA to expand production facilities and increase annual exports. The company has longstanding relationships with global retail giants such as Walmart, Under Armour, adidas, AMERICAN EAGLE OUTFITTERS INC., Jc Penny, and Gap. CFA produces over 60 million apparel pieces annually and accounts for a 27% share of Jordan’s apparel exports. NBK invested through NBK Capital Partners Mezzanine Fund II, and Gulf Capital invested through Gulf Credit Opportunities Fund II. Financial details of the transaction were not disclosed.
3.28.18 #CountrySpotlight: #India The number of first-time funds that held a close in 2017 reached 20, the highest total recorded to date for India, as new venture capital players continue to enter the scene. Heightened interest in VC in India raises the question of whether there are proportionately large opportunities with robust business models to be found on the ground, as long-term profitability remains a primary issue for Indian startups. Private capital fundraising and investment also increased by 30% and 0.5%, year-on-year. Deals in the financials sector boosted investment totals, accounting for 40% of total capital invested. The sector has enjoyed increased interest since 2015 and reached a record high of US$2.8 billion invested in 2017. The Carlyle Group’s US$250 million investment in credit card company SBI Card illustrates opportunities in the payments vertical, particularly relevant in a post-demonetization world where cashless transactions are essential. VC firms like Quona Capital and Saama Capital also invested in the sector, committing US$4 million to personal financial management platform Fisdom. Venture capital firms also invigorated India fundraising by raising US$964 million in 2017.
3.26.18 Global PE firms are launching impact funds tailored to institutional investors that have so far largely ignored the space, unable to accept the possibility of a below-market-rate return on an impact product. EMPEA ASEAN Representative Steve Okun talks to Asian Venture Capital Journal (AVCJ) about it here: https://bit.ly/2pIKRG9
3.23.18 #RegionalSpotlight: #CEECIS 2017 was a good year for private capital investment in CEE/CIS. Mid Europa Partners completed the region’s largest deal on record, joining Cinven and Permira to invest over US$2 billion in equity in Polish online marketplace Allegro. Experienced managers also raised the majority of capital for the region, with CEE-focused Enterprise Investors and Abris Capital Partners raising follow-on funds of US$592 million and US$566 million, respectively. In contrast, Turkey-focused funds raised just US$25 million in 2017, a significant decline from last year’s US$824 million total. However, this drop likely reflects the relatively shallow pool of fund managers dedicated to Turkey rather than a sudden decline in LP interest in the country, especially given strong exit results in Turkey over the past year. TURKVEN also completed IPOs for Mavi Jeans and DP Eurasia in Istanbul and London, with plans for an offering of hospital network Medical Park in 2018. An uptick in public markets exits across CEE and CIS suggests that GPs may no longer have to default to strategic sales for liquidity going forward.
3.22.18 #EMPEAMemberNews: Baring Vostok Capital Partners and MTP to inject up to RUB3.5 billion (US$61 million) in Russia-based online retailer Ozon. The company’s US$150 million round of funding back in 2014 was the largest in the history of Russian e-commerce. Ozon offers a diverse range of products to approximately 3.2 million buyers across Russia and boasted online sales that exceeded US$26 billion in 2016 (a 20% YoY increase). 2017 numbers are not yet publicly available.
3.20.18 Largest private capital funds that achieved a close in each of the five emerging market regions in 2017. Rank by size globally: 1) KKR (Asia); 2) AP Moller Capital (Sub-Saharan Africa); 3) Enterprise Investors (CEECIS); 4) Patria Investments (Latin America); 5) AfricInvest (MENA).
3.19.18 #CountrySpotlight: #Brazil Following a steep decline in private capital fundraising for Brazil which began in 2014, fund managers raised US$1.5 billion for the country in 2017—more than double the 2016 amount. Fund managers also invested US$2.4 billion in the country, a 14% increase from last year. Investments in power assets, which accounted for half of all capital deployed, drove this increase as opportunistic deals and greater demand for renewable energy attracted a record amount of capital to the sector.
3.13.18 #EMPEAMemberNews: Helios Investment Partners and Gemcorp invest US$116m in Gambia-based telecomms company, Africell via a syndicated loan. Africell operates mobile networks in Gambia, the DRC, Uganda and Sierra Leone, and plans to use the funds to expand its 4G service offerings.
3.13.18 #EMPEAMemberNews: Warburg Pincus plans to invest US$370m+ in Vietnam’s Techcombank, marking the largest ever private equity investment in Vietnam to date. The investment will bring Warburg’s total commitment to Vietnam to over US$1 billion. Techcombank is on of the largest private sector JSBs in Vietnam by total operating income and profit before tax (as of 2017). The bank serves more than five million customers via 315 branches and plans to use its new funds to expand its operations and market share in the country. The transaction is subject to regulatory approval.
3.13.18 Where’s the middle?
Large transactions have accounted for a higher share of disclosed capital invested in growth and buyout deals in emerging markets in recent years. The share of middle-market investments in the US$25 million – US$100 million range, declined to 14% of disclosed capital invested in 217, compared to one-third of all capital deployed in 2012.
3.8.18 #EMPEAMemberNews: Denham Capital and Themis launch new Africa Power Investment Platform and will invest up to US$250 million in equity to develop natural gas-fired and renewable power generation assets across Africa. Denham will invest through its International Power Fund.
3.7.18 #EMPEAMemberNews: Indonesia-based ride-hailing platform Go-Jek raises US$1.5 billion series E Round from a consortium of investors, including #EMPEAmembers KKR, Warburg Pincus, and The Northstar Group. Go-Jek currently has 25 million registered users across 50 cities in Indonesia.
3.5.18 Significant changes to #Cayman’s Anti-Money Laundering regulations are outlined in this brief http://bit.ly/2FgPgL5 by #EMPEAMember Trident Fund Services. New regulations apply to all Cayman investment funds. Previously exempt funds have until 31 May to comply w/ new rules.
3.5.18 #EMPEAMemberNews: NBK Capital Partners invests in major Saudi energy rental firm, Energia Trading & Contracting.
The deal marks the third investment from the $160m NBK Capital Partners Mezzanine Fund II, which was raised in 2017. Energia is one of the largest providers of temporary power solutions in Saudi Arabia with 500 generators and a total capacity of 250MW. The financing will facilitate the buy-out of Al Faris Equip of Al Faris Equipment Rental’s energy rental business, including the acquisition of a fleet of power generators previously leased by the Jubail-based Energia Model Trading & Contracting LLC.
3.1.18 Consumer services led all other sectors for emerging market investment in 2017, representing $17.9B in disclosed capital invested – nearly triple the 2008 total.
The two largest investments recorded in 2017—Hillhouse Capital Management and CDH Investments’ US$2.2 billion buyout of Belle International (China) and Mid Europa Partners, Cinven and Permira’s US$2 billion acquisition of Allegro* (Poland)—were both in the e-commerce segment. Over the last decade, capital deployed in consumer services (inclusive of retail, media and travel) has risen at a faster rate than in any other industry category, surpassing both utilities (including power) and health care.
2.28.18 Shifting composition of EM private capital fundraising
Since the financial crisis, we’ve seen the composition of fundraising by strategy shift as venture capital, infrastructure and private credit gain ground. In line with long-developing trends, the growth equity share of capital raised by EM funds continues to dip, making up just 25% over the most recent two-year period (2016-2017), compared to 41% in 2008-2009 and 51% in 2010-2011.
Turkey-based MLP Care Services, the operator of the Medical Park and Liv Hospital networks, has raised TRY1.4 billion (approximately US$366 million) in an IPO on Borsa Istanbul valuing the company at TRY4 billion (approximately US$1 billion). MLP sold 73 million shares at TRY19 (approximately US$5) per share, reportedly facilitating an exit for Turkey-focused private equity fund manager Turkven, which originally invested in the company in 2011. Singaporean sovereign wealth fund Temasek acquired a 15.7 percent stake in MLP through the offering.
2.23.18 Asia takes emerging markets fundraising to post-crisis high – EMPEA via @AVCJ
Emerging markets private capital fundraising – led by emerging Asia – reached its highest point since the before the global financial crisis in 2017, with capital dispersed more evenly across different strategies than ever before. Read the full article on AVCJ here.
2.22.18 Asia led emerging markets private capital fundraising in 2017 – its highest level since 2008 – accounting for a whopping $50 billion of the $61 billion total raised throughout EM.
$9 billion of that went to just one fund, KKR Asian Fund III. EMPEA members may access the detailed presentation and underlying raw data that supports all public exhibits by logging in here. Non-EMPEA members may access the public version of the 2017 YE stats as a PDF presentation.
2.21.18 EMPEA’s Just Released Year-End 2017 Global Private Capital Industry Statistics
Private capital opportunities attract investors at levels not seen since 2008. Our just released Year-End 2017 Industry Stats reveal year-on-year gains in funds raised and capital invested for private capital in emerging markets. Public market exits for private capital-backed EM companies also increased as fund managers took advantage of attractive conditions on public exchanges to list companies and conduct follow-on sales. EMPEA members may access the detailed presentation and underlying raw data that supports all public exhibits by logging in here. Non-EMPEA members may access the public version of the 2017 YE stats as a PDF presentation.
Organica has operations in Shanghai, Shenzhen, Manila, Jakarta, Kolkata and Budapest. The company plans to use the funds to strengthen its balance sheet and further invest in its online design platform and digital toolset.
Horizon sold a 40.9% stake in the company but remains an active shareholder with a 22.7% stake. Purcari operates 1,000+ hectares of vineyards and 4 production platforms across Romania and Moldova. The winery exports to North America, Central and East Asia, and Europe.
2.15.18 #EMPEAMemberNews: Warburg Pincus and Becamex IDC commit $200m+ to newly-formed joint venture, BW Industrial Development (BWID), with plans to develop institutional-grade industrial and logistics properties across Vietnam.
BWID plans to invest in logistics warehouses, build-to-suit and ready-built factories and other industrial facilities in key economic and industrial zones.
2.13.18 #EMPEAMemberNews: NBK Capital Partners fully exits inaugural $157m private debt fund, returning 17% gross IRR on investments in the UAE, Saudia Arabia, Kuwait and Turkey, ranking it among the top performing private debt funds in its vintage year.
Raised in 2009, the region’s first mezzanine fund – a hybrid of debt and equity financing – was a pioneer for flexible long-term direct lending launched in the wake of the global financial crisis to meet the financing needs of mid-sized firms unable to secure attractive terms with banks constrained by regulatory and structural changes. The closure of NBK Capital Mezzanine Fund I represents the successful exit of eight investments in the portfolio for NBK Capital Partners, the alternative investments arm of NBK Capital.
2.13.18 #EMPEAMemberSpotlight: Leadership Circle member Gaja Capital provides growth capital to sector leaders from India’s middle-market.
Gaja is currently investing out of its third fund, with the previous two mostly exited, having achieved liquidity in 9/12 investments + five IPOs. Gaja has invested in significant minority or control positions in companies across the consumer, financial services and education sectors.
2.12.18 #EMPEAMemberNews: Cepheus Growth Capital Partners reaches the first close in its maiden fund ($51m).
Will target opportunities in Ethiopia’s manufacturing, agro-processing and services industries. Backers include CDC, Norfund and the European Investment Bank. Target size $100m.
2.7.18 Turkish Deputy Prime Minister Mehmet Simset addresses attendees at EMPEA and Globalturk Capital‘s Recap of the Executive Briefing of Private Equity in Turkey and Environs at the London Stock Exchange on Feb 7.
Stresses how the government has decreased the tax burden on Turkish companies and how the country has been attractive international investors, thanks to its competitive labor costs.
With Actis’ help, customer connections more than doubled, electricity line losses were reduced, and cash collection rates increased by 98% over six years. See how they did it.
1.31.18 Letter from the Board | At EMPEA, we continue to examine new investment trends, including the growth of VC, private credit and impact investing.
We seek to play a key role in helping facilitate the evolution of these investment advancements, by removing barriers to investment, and tracking and analyzing the data across markets. EMPEA has a proven track record in helping facilitate the evolution of the industry. We remain dedicated to the work we started with our members 14 years ago for what was then a newly forming emerging markets private equity asset class. Read the full Letter from the Board here.
The center began accepting patients in early 2015, and today has an enterprise value $71m; provides services to over 34,000 individuals/year (89% of those being curative); and was awarded a Gold Medal from the GIIRS for its development impact business model. See how they did it.
1.12.18 Comparing tax elements of 15 emerging markets, plus the United States. What are the primary tax drivers impacting investor and manager decisions? Where are there gaps and challenges? Read about it here.
12.27.17 #PrivateCapitalImpactCaseStudy: At the time of Emerging Capital Partners‘ investment in Eranove, Africa had significant power and water challenges due in part to large infrastructure gaps.
80-90% of the African population was not connected to a power grid and nearly 70% had no access to clean water. See how ECP helped Eranove grow organically, become more operationally efficient, and expand globally.
12.22.17 #PrivateCapitalImpactCaseStudy: See how Aspada Investments helped “the Uber for farm machinery in India” scale its revenues from US$40k in 2015 to ~US$1 million by 2017.
Aspada was chosen as one of three finalists in the EMPEA Institute’s 2017 Sustainability & Operational Excellence Challenge for its management of EM3 AgriServices, India’s first provider of farm services on a pay-per-use basis. Services on the platform are provided for the entire farm cultivation cycle including land development, land preparation, seeding, sowing, plating, crop care, harvesting and post-harvest field management. Download the case study here.