Investors remained high on emerging markets private equity, raising $25 billion this year, and are already set to top last year's total despite a global recession, according to Reuters.
The findings come from a report by the Washington D.C.-based Emerging Markets Private Equity Association. According to the report, the present level of fundraising suggests a total of $75 billion for 2008. That compares with $59 billion in the whole of 2007.
Although a sizeable increase, it would be a slowdown from the doubling of funds seen between 2006 and 2007. While a reluctance of major banks to lend money has stifled Western buyouts, deals in emerging markets rely on cash or local banks less exposed to the global credit crunch.
The report said emerging market private equity funds were expected to deliver an average premium of 6.7 % relative to U.S. counterparts, despite broadly similar management fees - 1.95 % for emerging funds and 1.8 % for those focused on North America and Europe.
The
EMPEA said 74 % of private equity participants surveyed expected to increase commitments to emerging markets private equity over the next three to five years, with a third pointing to improvements in political and economic risk as the main reason for this.
It said Asia continued to dominate, particularly China and India, but with Latin America, Africa and the Middle East also attracting great interest from investors.
It said 52 % of private equity limited partners polled expected to invest in Africa in the medium term against 30 % now, while 65 % planned to do so in Latin America against 40 % now. In the Middle East, 35 % said they would invest there by 2013, against 11 % now.
