Emerging market funds raised nearly $67 billion last year, a 12 percent rise from 2007 that is due largely to substantial growth in Asia-focused funds.
Private equity funds focused on developing countries in Asia raised $40 billion in 2008. This is a 39 percent increase from the $29 billion they raised in 2007, according to the EmergingMarkets Private Equity Association (EMPEA).
China-focused funds contributed largely to the rise in 2008 fundraising levels, raising $14.5 billion in 2008, compared to $3.9 billion in 2007.
The second-most active category was India-focused funds, which saw an increase from $4.6 billion raised in 2007 to $7.7 billion in 2008.
Middle East- and Africa-focused funds respectively saw year-over-year fundraising increases of 17 percent and 37 percent.
In contrast, capital raised by Central and Eastern European funds experienced a sharp decline, from $14.6 billion in 2007 to $5.6 billion in 2008. These funds accounted for 8 percent of total emerging markets capital raised in 2008, down from 25 percent in 2007.
This year, EMPEA estimates 371 emerging markets funds are seeking about $144 billion, or nearly double the capital raised last year.
“[This] will be a difficult year for fund managers seeking to raise capital, but funds with dry powder to invest are in a very good position right now,” EMPEA president Sarah Alexander said in a statement.
“We're entering a period of potentially very ripe conditions for private equity in these markets: lower entry prices, less competition for deals and very attractive deal flow from entrepreneurs with few alternative options for raising capital.”
She added: “The real challenge is convincingWestern investors to maintain exposure to what are considered riskier markets.”
CERBERUS QUITS HONG KONG
New York-based investment group Cerberus Capital Management is close to shutting down its office in Hong Kong, less than two years after it was established, people familiar with the matter told the Financial Times. Cerberus opened its Hong Kong and Beijing offices to lead its push into China following the hire of John Snow, the former Treasury secretary, as chairman of the firm in 2006.
KOREAN FIRM DOUBLES MONEY
Seoul-based private equity firm STIC Investments has sold its stake in Medy-Tox, a Korean biotech company, which was listed on the Korean Stock Exchange. The firm has divested its entire holding in the company, generating a net internal rate of return of 33.2 percent and returning a 2x multiple on its investment. STIC acquired a stake of about 10 percent in Medy-Tox in the last quarter of 2006, Trevor Chan, a director of the firm, said.
NEW ASIA LEVERAGED FINANCE HEAD FOR HSBC
HSBC has named Jeff Bennett, a managing director within the bank's leveraged and acquisition finance unit, as head of the same division for Asia Pacific. This follows the recent departure of David Simons, confirmed an HSBC spokeswoman who declined to comment on the reason for his leaving. Bennett will spearhead the bank's Asian efforts to extend and expand its lending capabilities.
RESHUFFLE AT CREDIT SUISSE FINANCIAL SPONSOR GROUP
Ronan Agnew has resigned from Credit Suisse as the bank's head of financial sponsors coverage in the Asia Pacific region, according to a source. Agnew relocated to Hong Kong in May 2008. He was previously based in London as co-head of Credit Suisse's European financial sponsors group, alongside Didier Denat. Credit Suisse directors Toby Groser and Ben Ngai will replace Agnew as co-heads. They will report to Joseph Gallagher, the bank's head of M&A in Asia Pacific.
BHP CHIEF TO TAKE REINS AT TEMASEK
Ho Ching will step down as chief executive of Singaporean sovereign wealth fund Temasek Holdings in October. She will be replaced by Chip Goodyear, the former chief executive of mining company BHP Billiton. Ho has been an executive director and chief executive of Temasek since January 2004. She joined Temasek as a director in January 2002 and became an executive director inMay 2002.
UK FIRM BACKS CHINA FUND
The UK's Lloyds TSB Development Capital has committed $30 million to China New Enterprise Investment Fund II (CNEI), marking its first investment in China. CNEI invests in established Chinese growth companies and is managed by New Enterprise Management partners Xiaoyang Yu, Johannes Schoeter andHirosuke Sakai. It is targeting a final close of $250 million to $300 million, according to PREManagement's website.
KOTAK GETS CDC SUPPORT
UK government-backed funds of funds manager CDC Group has committed $40 million to the Kotak India Private Equity Fund, which will target investments in small- to medium-sized enterprises (SMEs) on the subcontinent. The second fund to be raised by Kotak Mahindra Bank's private equity division, the vehicle is targeting $200 million, with a hard cap of $250 million. It will invest between $15 million and $40 million for minority stakes in SMEs focused on domestic consumption and consumer spending, infrastructure and infrastructure-led services.
AUSTRALIAN RETAILER INTO RECEIVERSHIP
Australian Discount Retail (ADR), a portfolio company of Australian private equity firms CHAMP Private Equity and Catalyst Investment Managers, has gone into receivership. With 402 stores in Australia, ADR is the country's largest discount variety retailer. Its three core retail chains are discount stores Sam's Warehouse; convenient stores Crazy Clark's and Go-Lo; and bargain stores Chickenfeed. Chickenfeed, a standalone operation, is not in receivership or voluntary administration.
ECONOMY CITED AS SUN LEAVES TOKYO
Sun Capital Partners has closed its Tokyo office following a decision by the firm to move away from platform opportunities in Asia. “This decision was driven by the challenging economic conditions in Japan and across Asia, and we regret the impact on our former colleagues,” the firm said in a statement. All eight investment professionals based in Tokyo have been made redundant as a result of the closure.