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Record-breaking investment in emerging market funds, says Empea

A total of 70 private equity funds raised USD21.5bn in the first half of 2007 for investment in the emerging markets of Asia, Europe, Latin America, the Middle East and Africa, compared wi

A total of 70 private equity funds raised USD21.5bn in the first half of 2007 for investment in the emerging markets of Asia, Europe, Latin America, the Middle East and Africa, compared with USD33.2bn raised by 162 funds throughout 2006, according to the Emerging Markets Private Equity Association.

‘The pace of fundraising in the first six months of this year is evidence that investor interest in these markets is still growing,’ says Empea president Sarah Alexander. ‘These half-year figures are impressive, and we expect 2007 to be another record-breaking year for emerging market private equity fundraising. A number of funds had significant closings in late summer, and several large funds are expected to close by year’s end.’

Empea estimates that at least an additional USD7.7bn was raised for emerging market funds in July and August, bringing the total raised so far this year to more than USD28bn. Funds raised for emerging market private equity investment increased more than ninefold between 2003 and 2006, according to the association’s estimates.

Funds focused on Asia accounted for USD11.6bn of the total in the first six months of the year, compared with USD19.4bn raised throughout 2006. China- and India-dedicated funds alone drew USD4bn in commitments, while pan-Asian funds attracted USD7bn. At least 21 USD1bn-plus Asian funds are currently in the market, including three funds each raising more than USD3bn that are expected to close by the end of the year.

Latin American funds raised USD1.4bn in the first half of 2007. With the addition of two USD1bn-plus closes in July, the region is poised to match fundraising levels not seen since the 1990s.

Funds focused on Africa took in USD592 million through June 2007, with South African funds accounting for USD100m of the total. With the addition of two large closes by pan-African funds in July, one for USD1.3bn and another for USD523m, as well as USD1bn being raised by South African funds, 2007 looks to be a watershed year for fundraising.

Fundraising for the central and eastern Europe totalled USD3.6bn in the first half of 2007, with Russia and the former Soviet Union accounting for USD2.1bn, while eight funds focused on the Middle East raised USD1.8bn. As of August, Empea counted 60 funds raising an additional USD14bn for investment within the region.

The Emerging Markets Private Equity Association is an independent industry association that promotes a greater understanding of and a more favourable climate for private equity investing in emerging markets. Its 167 members represent 40 countries and more than USD400bn in assets under management.

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