Next year could be an opportune time to invest in mid-market private equity deals in emerging and frontier markets in Africa, Latin America and Asia, according to Sivendran Vettivetpillai,
Next year could be an opportune time to invest in mid-market private equity deals in emerging and frontier markets in Africa, Latin America and Asia, according to Sivendran Vettivetpillai, chief executive of Aureos Advisers.
Aureos Advisers is the advisory company to Aureos Capital, a private equity fund management company indirectly owned by European governments and domiciled in Mauritius that specialises in providing expansion and buyout capital to unlisted mid-cap businesses across Asia, Africa and Latin America.
Noting that Aureos has around USD600m in uncommitted capital, some two-thirds of its total funds under management, Vettivetpillai says: ‘Aureos has a very strong deal flow pipeline across the globe and is presently investing in these markets, but on a very selective basis and the pace of investment is therefore reduced. Assuming that world stock markets and valuations generally become more stable in the next few months, we expect to complete several deals in the second half of 2009.’
He says that in most of the countries in which Aureos invests, with the exception of Kazakhstan, banks appear to have avoided the toxic assets that have ravaged balance sheets in more developed economies. While banks remain cautious because of the global economic slowdown, there have been no bank liquidity scares and confidence about future growth is more robust than in developed economies.
In sub-Saharan Africa, for example, the IMF is forecasting 5.5 per cent growth this year and 5.1 per cent in 2009. As banks in these markets have fewer bad debts on their books, their capacity to fund economic growth should be less constrained.
‘Aureos has seasoned investment teams around the world who have seen many economic cycles and in several cases have also experienced much worse conditions than prevail today,’ Vettivetpillai says.
‘Having teams on the ground, as Aureos does, with such experience, puts it in a good position to weather this storm. Our ability to understand and manage risk in a local context and to keep an eye on our investments daily is crucial.’
Aureos Capital was formed in July 2001 to assume management of a range of funds originally sponsored by CDC Group and to raise and manage a new generation of private equity funds. Its shareholders are group employees along with CDC, Norfund and FMO, the UK, Norwegian and Dutch development finance institutions respectively.
Since 2001, Aureos has established 16 regional private equity funds and boosted assets under management to more than USD1bn and extended its geographical footprint to more than 50 emerging markets in Asia, Africa and Latin America. Its investors include financial institutions, bilateral and multilateral development finance institutions, funds of funds, foundations, family offices and high net worth individuals.
