ATP PEP to double up on emerging markets

The influential European LP is considering whether to use a fund of funds – something it has not done in its 10-year history – to access the Chinese private equity market.

ATP Private Equity Partners, one of Europe’s largest private equity limited partners, will ramp up its exposure to emerging markets to 10 percent when it raises its next fund later this year. Formerly the €500 million-a-year private equity programme had channelled just 5 percent of its capital into the emerging markets.

The group, which runs the private equity investment programme for Danish pension ATP, will likely raise its next fund – Fund IV – in the third quarter of 2010. It closed Fund III in 2007, which comprised a commitment of approximately €1.5 billion from its sponsor.

Klaus Bjørn Rühne

ATP PEP partner Klaus Bjørn Rühne recently expressed excitement about the macro-economic opportunity presented by China in an in-depth interview to appear in the July/August edition of Private Equity International. He also voiced concerns over corporate governance standards and the amount of money being committed to the market.

“From a due diligence perspective you need to feel you have full transparency, even from a language perspective,” he said. “From the top it looks great, but when you get down, it can be a difficult process.”

“For Asia there is still discussion about whether we should do it ourselves or use a fund of funds. If we did use a fund of funds it would be a strategic relationship, so we get full access to due diligence and we can make commitments alongside the fund of funds,” he added.

Recent emerging markets funds to which ATP PEP has committed include Advent International’s $1.65 billion fifth Latin America-focused fund and India Value Fund IV.