Deal activity continues in emerging markets as PE investors see opportunity in adversity
Private equity investment activity held steady for emerging markets in 2013, with deal volume gaining momentum in the last six months, according to the Emerging Markets Private Equity Association (EMPEA).
This investment activity led to an overall capital flow of USD24bn in emerging markets last year, representing 883 deals and a seven per cent decline in capital year-over-year from 2012.
While fundraising was down with only 150 funds raising USD36bn in 2013, a 19 per cent decline in total capital raised compared to 2012, the relatively constant deal volume indicates that private equity investors continue to find investable companies across a diverse array of markets.
“Fundraising in private equity follows a cyclical pattern and we are still in a downturn phase of the cycle. The investment side is the real story, however, because where others see adversity, private equity investors see opportunity,” says Robert van Zwieten, president and CEO, EMPEA. “Private equity continues to be the optimum way to tap into emerging market investment opportunities. We expect that these markets will adapt, greatly diverse as they are, to the new economic realities of a moderate Chinese economic slow-down and US interest rates rising gradually over time. For the time being, with asset re-pricing underway and local currencies depreciating in many emerging markets, this is a favourable time for highly discerning fund managers to put capital to work in select sectors.”
According to EMPEA’s data, some of the biggest year-over-year gains from 2013’s deployment of capital went to markets beyond the BRICs – including those in Southeast Asia, East Africa and Latin America (ex. Brazil) – a strong indication of where investors are seeing the most promising prospects for growth.
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