Frontier markets are the new emerging markets, according to Global Horizon Partners. The firm is currently raising a fund of funds with a $150 million (€102 million) target for GPs in economies identified as highly attractive by the firm.
Global Horizon's designated frontiers include Asian countries India, Malaysia, Thailand, Vietnam and Indonesia as well as many other countries around the world such as Colombia, Morocco and Nigeria.
The choice of countries is based on the firm's proprietary Wealth of Nations Index, which measures “the sustainable economic and social development potential of a nation and related risks, against those of other nations”, according to the firm's website.
“I saw both the need and the opportunity for this fund probably six or eight years ago during my travels as a journalist,” said Crocker Snow, Global Horizon's founder. Snow founded The World Paper in 1978. The publication was inserted weekly into daily newspapers around the world. During his more than two decades at the publication he traveled throughout the developing world. “I became increasingly aware of the new entrepreneurial class in these countries. The only thing they lacked for was capital.”
Snow has brought on board two partners to create a new fund of funds platform: AIG and Cornerstone Partners. AIG is the anchor investor, and will commit around a quarter of the total fund when it holds its first close on between $75 million and $100 million later this year. (A source close to the fundraising says the fund's cap may be raised).
The Global Horizon Fund will look for indigenous funds with local managers and LPs, ideally those that offer co-investment opportunities. Global Horizon Partners has already begun due diligence on several potential local funds, Snow said, which will enable it to start investing immediately after the fund's first close.
“Our group and our expanded network of policy makers, finance people, journalists and others throughout the world is very solid, and current,” Snow says. “We feel that we're currently ahead of the game.”
PERMIRA NOTCHES FIRST JAPAN DEAL
Permira, the global buyout firm, is buying Arysta LifeScience, a Japanese agrochemical company founded in 2001, from Olympus Capital Holdings Asia, a mid-market private equity firm with offices across the region. The enterprise value of Arysta is ¥250 billion ($2.2 billion; €1.5 billion), making it the largest buyout in Japan this year. The deal is also Permira's first investment in Japan since its local office opened in September 2005 and came two weeks after an $840 million investment in Galaxy, a Chinese casino business. According to a source close to the firm, the timing of the two deals is coincidental, despite a slowdown in the firm's core European market. From its Tokyo base, Arysta markets, develops and distributes chemical solutions.
KUO JOINS BLACKSTONE IN HONG KONG
US alternative asset firm The Blackstone Group has hired former H&Q Asia Pacific managing director Andrew Kuo to its Hong Kong office. Kuo will be managing director and vice chairman for greater China, primarily responsible for the firm's private equity business. Before working at H&Q Asia Pacific, Kuo was managing director and senior country officer for the greater China operations of JP Morgan, and prior to that was head of corporate banking at Citibank Taipei. Blackstone established its Hong Kong office in 2005 to support its fund of hedge funds business and then launched a private equity operation there the following year, concurrent with the hire of former Hong Kong financial secretary Tong Leung as senior managing director and chairman for greater China. The firm made its first private equity investment in China in September when it paid $600 million (€423 million) for a 20 percent stake in China National Bluestar Corporation, a subsidiary of state-owned China National Chemical Corporation.
ABRAAJ NEARS $2BN FUND TARGET
Dubai-based investment firm Abraaj Capital has announced a second closing of its growth capital and infrastructure fund on $1.7 billion (€1.2 billion). At its present size, the fund is the largest ever raised in the Middle East and North Africa region. Institutional investors make up 92 percent of the firm's investor base, according to Abraaj. Around 30 percent of the investment came from outside the fund's target investment areas of the Middle East, North Africa and Southern Asia. As Abraaj continues to pursue its $2 billion target, it is also considering an IPO of 20 to 30 percent of its management company, according to a source. The firm could raise up to $1 billion through a listing on Dubai stock exchange DIFX, according to UK newspaper the Financial Times.
SEMINAL STOCK MARKET DEAL FOR CVC
CVC Asia Pacific has completed the acquisition of a 29 percent interest in Zhuhai Zhongfu Enterprise, a bottling company listed on Shenzhen Stock Exchange, from its controlling shareholder for $225 million (€158 million). Zhuhai Zhongfu is the largest manufacturer of plastic bottles in China and supplies both Coca Cola and Pepsi. China is the second-largest beverage market in the world, and continues to grow at a rapid pace. Demand for the bottles, already widely used, is projected to grow at 11.6 percent a year (compound annual growth rate) from 2006 to 2011, according to a CVC statement. The transaction, agreed in March this year, successfully closed last month after obtaining regulatory approvals. According to Andrew Whan, a Hong Kong-based private equity partner at law firm Clifford Chance, the deal “was the first control-oriented and certainly the largest A-share PIPE deal in China to have closed successfully since recent regulatory reform made strategic investments by foreign investors in Chinese listed companies possible.”
ADVEQ ANNOUNCES NEW BEIJING BASE
Swiss fund of funds manager Adveq will open a Beijing office soon, creating its first base in China from which to invest a $200 million debut Asia fund. The office will be the firm's fourth after Zurich, Frankfurt and New York. An investor said: “The firm has fully raised a fund in excess of $200 million to invest in Asia. It has already committed a dozen investments across China and many more in Asia.” Bruno Raschle, Adveq's chief executive, said: “We have historically run our activities out of Switzerland and the growth of our organisation has caused us to open offices in other parts of the world. The Asian office is because this part of the world is playing an increasingly important investment role.” The firm's international expansion saw it open a New York office in June.