A fellow journalist recently said she was stocking up on essentials in preparation for a“posteconomy lifestyle”. She was joking, of course, but the gag wouldn't have worked were she not playing on some very real paranoia prevalent among the public at large, including private equity professionals.
The global financial landscape is changing at a rapid clip but rather than take the “Chicken Little”approach, PEOhas endeavoured to rationally deconstruct these events for its readers.
Last month, we focussed on explaining how private equity might be affected by the implosions of investment banks, while this month we analysed how government bailouts might influence the industry. In the US, for example, we found some private equity firms feeling pleased about potential newprospects as USTreasury secretary Henry Paulson indicated the government would offer distressed financial services co-investment opportunities that might not otherwise have been made available.
We've also been aggressively following two areas market participants have flagged as relatively resilient to the global financial turmoil: energy and emerging markets.
Most of the GPs who spoke at the Private Equity International Energy Forum held last month in New York noted that credit conditions are actually fuelling unmatched levels of deal flow. As if to prove the point, PEO featured more than 25 stories in the past month on energy-related deals and funds, from Milan's Advanced Capital launching a €500 million energy funds of funds to US government agency OPIC investing $505 million in clean energy funds including those managed by Middle East &Asia Capital Partners and US Renewables Group.
Some of our energy stories also hit upon the aforementioned theme of continued activity in emerging markets. For example, we detailed numerous African fundraises and first closes including South Africa's The Evolution One Fund, which has raised 40 percent of its targeted R1bn (€74 million; $99 million) total, and Aureos Africa' $253 million first close, putting it more than halfway toward its $400 million target for the fund, which is a whopping eight times larger than its existing Africa-focussed funds. We also reported on a slew of deals, including: Swicorp taking a strategic stage in Algerian fuel distributorPetroser; Israeli venture firm Pitango and China Israel Value Capital investing $35 million in Chinese solar company JinkoSolar; and Conduit Capital winning a $1.4 billion pipeline concession in Peru.
Such growth and success stories highlight that there is indeed a silver lining amid an admittedly stormy atmosphere and that private equity, despite – and in some cases because of – any turbulence it may encounter, possesses staying power.