Emerging markets private equity fundraising accounted for 20 per cent of all capital raised globally in 2012 but, China and India saw a marked decline in interest. A total of 161 emerging markets funds raised $40.3 billion during the year, up slightly from the $38.5 billion raised in 2011, according to numbers released by the Emerging Markets Private Equity Association
(EMPEA). The body represents over 300 emerging markets focused private equity and venture capital firms. While fundraising is up, investment levels in the region are down. A total of $23.7 billion was committed to emerging market companies across 819 deals against $26.9 billion invested in 876 deal in 2011.
“The pace of investment activity has slowed as businesses adjust to relative slowdowns in emerging market growth, as well as uncertain legal and regulatory regimes and challenging exit environments that continue to characterize a number of these markets,” Jennifer Choi, Acting CEO of EMPEA said in a press release. However, while investments were lower in China and India, investors intensified their focus on select non-BRIC countries such as Chile, Malaysia, Morocco and United Arab Emirates. Access more details here
What happened in India
2012 was not a good year for the private equity market in India, either in terms of funds raised or investments committed to companies. Investments fell to a seven-year low — capital invested declined 57 per cent to $2.7 billion. Fundraising dropped 24 per cent to $2.08 billion. Note: The EMPEA fundraising data takes into account only funds raised by India-dedicated funds and not fund allocations made out of global funds.
The China decline
Fundraising for China has fallen sharply. Only $10.8 billion was raised in 2012 against $16.6 billion in the previous year. Investments are also down in the Middle Kingdom. Against $10.5 billion invested in 2011, investors pumped in only $7.1 billion last year.
China’s and India’s losses appear to have been South East Asia’s gain, at least on the fundraising front. A total of 13 funds raised $1.4 billion for the region, the largest number of fund closes since 2006 and the most capital raised since 2007. Southeast Asia will be a region to watch in 2013 as private equity firms deploy capital, says EMPEA.