PE fundraising halves in emerging markets

Private equity firms in emerging markets raised $10.8 billion during the first half of 2013, a 52 percent drop on fund commitments during the same period last year, according to data from the Emerging Markets Private Equity Association. 

However, emerging Asia vehicles showed the strongest resilience. Emerging Asia represented 63 percent of all fundraising during the first half, compared to the 23 percent of commitments made to Latin America funds. 

Kohlberg Kravis Roberts' $6 billion Asia Pacific vehicle, which closed in July, is excluded from the results and will be included in third quarter figures. 

Across all emerging markets, funds of less than $250 million represented 68 percent of all capital commitments during H1, an increase on 53 percent over the past two years. 

“While funds raising less than $250 million appeared to be less affected by the recent downturn in private equity fundraising across emerging markets, there has been a significant drop in the number of larger funds raised, as many such funds closed in recent periods. A remarkable ten EM PE funds raising over $1 billion 
each closed in 2012,” the statement said.

“The resilience of smaller funds in recent months and continued investor interest are proof that the emerging markets growth story remains intact. Funds of these sizes are well-positioned to take advantage of the wealth of middle-market investment opportunities available at smaller ticket sizes in these markets,” Robert van Zwieten, president & chief executive at EMPEA added.

Asian economies experienced an upswing in deal activity during the first half of the year, according to EMPEA. In South Asia, while fundraising was down 62 percent, deal value increased 11 percent year-on-year to $1.7 billion. 

Deals during the half included five investments in Malaysia, most notably CVC Capital Partners’ $407 million buyout of restaurant operator QSR Brands-KFC Holdings – the third largest emerging markets deal so far in 2013. Vietnam housed two more of the ten largest emerging markets deals with KKR’s $200 million growth investment into Masan Consumer; and Warburg Pincus and Dragon Capital’s $200 million growth investment into Vincom Retail.