China leads strong first half for EM investing

EM managers invested more than they raised in the first half, according to data from EMPEA.

Emerging market fund managers invested just over $8 billion in private equity deals in China in the first half of this year, more than 40 percent of the total invested across all emerging markets.

Emerging market private equity managers invested $18.9 billion in 792 transactions in H1, according to data from the Emerging Markets Private Equity Association released on Wednesday, putting the year on track to become the most prolific investment year since EMPEA began reporting on investments in 2008. Investments in emerging Asia accounted for $14.5 billion.

The H1 2017 investment figures compare with $24.4 billion invested in 1,5663 companies in the whole of 2016, and a high of $32 billion for the full-year 2014.

On the fundraising side, 99 emerging markets-focused private equity funds closed in the first half having raised a combined $18 billion. Of that, $15.8 billion was raised for emerging Asia.

“Institutional investors in developed and developing markets are looking for outsized returns, and their understanding of the emerging market opportunity set has evolved,” Robert van Zweiten, president and chief executive officer at EMPEA said in a statement. “The increased activity in the first six months of the year is reflective of targeted moves to capture specific growth opportunities.”

Earlier this month KKR opened an office in Shanghai, its third in China, as it seeks to partner with more Chinese companies in their regional expansion, as reported by Private Equity International. KKR, which is currently deploying the $9.3 billion Asian Fund III, the largest pan-Asian vehicle raised to date, said China is a core focus within its Asia-Pacific strategy.

Overall, private capital fund managers – including private equity, infrastructure and real assets, and private credit – invested $22 billion in disclosed deals across emerging markets during the period. More than 80 percent of infrastructure and real assets investment was made in Latin America, particularly in Brazil, while emerging Asia saw the bulk of private credit investment.