Emerging markets funds are increasing marketshare of the global private equity fundraising pool, accounting for 15% of new commitments globally in 2011, up from 11% in 2010, according to data from the Emerging Markets Private Equity Association (EMPEA).
China and Brazil led the way for private equity fundraising in the emerging markets in 2011. Fundraising was up by 64% year on year, reaching a 3-year high of US$38.5 billion. And 876 private equity and venture capital deals valued at US$26.9 billion were completed in the emerging markets, representing 11% of invested private equity capital globally, according to EMPEA.
In 2011, China drew its largest share of global private equity fundraising to date with 43% of capital raised or US$16.6 billion. Local currency funds in China dominated in 2011, with Renminbi funds accounting for 60% of the 63 funds focused on China and one-quarter of all 148 emerging market funds raised in 2011, versus 18% in 2010, according to EMPEA data.
Thomson Reuters, publisher of peHUB, ranks the $2.46 billion Baring Asia Private Equity Fund V as the largest vehicle raised in the last year focused on investments in Greater China, India, Japan, Singapore, South Korea or South East Asia. The fund is 60% larger than BPEA’s Fund IV, which was one of the largest regional growth equity funds in Asia when it closed in February 2008 at $1.52 billion. Baring Asia’s vehicle was closely followed in second place by China’s $2.37 billion Hony Capital Fund V. PAG Capital Asia, a Hong Kong-based private equity fund launched by former TPG Capital executive Weijian Shan, came in third place raising $1.56 billion, followed by China’s Tencent Collaboration Fund in fourth place which raised $1.53 billion. Coming in fifth place, according to Thomson Reuters data was Rio de Janeiro, Brazil-based Vinci Partners which closed Vinci Capital Partners II on $1.4 billion.
According to EMPEA, Brazilian funds raised a record US$7 billion in 2011, or 18% of the total new capital committed to emerging market funds. EMPEA’s president and CEO, Sarah Alexander said in a statement: “The surge in appetite among investors for exposure to Brazil has been one significant aspect of the fundraising recovery in the emerging markets.” Nearly all (95%) new capital raised for Brazil in the last year went to five funds, each of which raised US$1 billion or more and together accounted for US$6.7 billion.
Alexander added that while some may argue the top line figures for Brazil and China are indications that the markets are reaching a saturation point, EMPEA believes the middle market in Brazil, as in many other emerging markets, lacks access to financing generally and that fewer and fewer established funds are scaled to pursue those opportunities as fund sizes grow.
EMPEA’s 300 members represent nearly 60 countries and over US$1 trillion in assets under management.
Scroll down the slideshow to find out more about how emerging markets private equity did in 2011 from EMPEA.
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Image credit: Photo of emerging markets signpost courtesy of Shutterstock