Data & Intelligence

EM PE Review – Volume VIII, Issue 1

in this issue


The Evolution and Future of Private Equity in China

The Importance of Hedge Funds in Emerging Markets: An Analysis by PineBridge Investments

Inside Perspectives: An Interview with Jie Gong and Neil Haper of Morgan Stanley Alternative Investment Partners

The Inaugural Private Equity in Southern Africa Conference–Johannesburg

Industry Data

EMPEA Industry Statistics

EM PE Performance

Notable Exits & IPOs

Viewpoint from EMPEA president and ceo sarah Alexander

Fundraising for emerging markets private equity grew by 64% last year, reaching a 3-year high of US$38.5 billion and accounting for 15% of the global fundraising pool in 2011, up from 11% in 2010. The macro story of EMPEA’s statistics suggests that investors are clearly still seeking to expand their PE exposure in emerging markets and are shifting capital from developed to developing countries to generate returns.

At the same time, however, the underlying data also show that LPs are concentrating their funding on just a few countries and large funds. Funds dedicated to China and Brazil alone captured 61% of the total emerging market funds raised, with China drawing a record 43% and more than doubling the funding raised in 2010. RMB funds continue to make up more than 50% of the funds raised for China.

While the Chinese market continues to dominate LPs’ focus, it remains difficult to assess from afar, with multiple strategies claiming the PE mantle and estimates of active RMB PE funds ranging from dozens to thousands. In this edition of the EMPEA EM PE Review, we share with you how we analyze the market, particularly RMB funds, distinguishing various types of private equity activity and the differences we see between institutional quality and non-institutional quality funds. Our goal is to help market participants gain a better understanding of the real investible universe of fund managers operating in China, and ultimately support the ongoing development of best practices that will institutionalize the asset class in the country.

In addition to country focus, LPs are seeking to commit larger chunks of capital, driving a bias in 2011 toward large funds. In fact, 28%—the highest percentage ever— of funds across emerging markets with final closes in 2011 were greater than US$500 million. In Brazil, five funds, each of which raised US$1 billion or more, accounted for 95% of all capital raised for the market last year.

As a result of such concentration in fundraising, LPs may be missing a wealth of opportunities that target investments in the lower and middle market space. In this issue, Jie Gong and Neil Harper of global fund of funds Morgan Stanley Alternative Investment Partners discuss how they look for the less prominent—but as promising— segments of the emerging markets. Separately, the team at PineBridge Investments articulates how a hedge fund approach may provide a complement to private equity to enhance exposure and minimize risk in emerging markets.

We look forward to exploring these and other themes in greater detail at the IFC/ EMPEA 14th Annual Global Private Equity Conference in Washington, DC on 15–16 May. This year will also see a return of the popular Institutional Investors-Only Day on 14 May, and, for GPs, we are launching our first EM PE Fundraising Masterclass on 17 May devoted to sharing fundraising perspectives and industry best practices. I hope you will be able to join us for what will surely be an exciting week for the industry.

EMPEA represents the leading global investors in EM. I look forward to working alongside to drive much-needed capital for financing entrepreneurs and businesses worldwide.

Renuka Ramnath | Founder, Managing Director & Chief Executive Officer, Multiples Alternate Asset Management Private Limited

EMPEA plays an important and energetic role across the markets it represents, driving outreach and research initiatives, and promoting the role of private capital.

Brian Lim | Partner and Head of Asia and Emerging Markets, Pantheon Ventures

The developed markets have no equivalent to the role EMPEA is playing as a convener and source of trusted information in the emerging markets.

David Rubenstein | Co-Founder and Co-Executive Chairman, The Carlyle Group

I’m honored to join fellow industry pioneers in the leadership of an unparalleled network, filled with first movers, shaping the future of industries and communities.

Dr. Andrew Kuper | Founder and CEO, LeapFrog Investments

EMPEA's market and industry intelligence opens doors to new sources of capital.  I look forward to the future success of EMPEA and its members.

Torbjorn Caesar | Senior Partner, Actis

While there are certainly challenges for the industry, the opportunities abound in our target markets and globally, making a global association like EMPEA more relevant than ever.

Drew Guff | Managing Director & Founding Partner, Siguler Guff & Company