Preqin: Emerging Markets Private Equity Assets Surpass $560B

Jul 13 2017 | 11:19pm ET

Private equity companies have significantly increased their exposure to emerging markets over the past several years, according to new data from alternative assets research firm Preqin, going from $254 billion in assets held by emerging-market PE funds at the end of 2010 to $564 billion by September of last year and are up six-fold since 2006’s $92 billion. 

Meanwhile, capital distributions back to investors have outstripped capital calls since the start of 2015, the firm’s research shows, and net capital flows totaled $13 billion in the first three quarters of 2016 (the latest data available), despite EM-focused private equity funds representing a declining proportion of global activity in recent years. 

The data was published in Preqin’s recent Private Equity in Emerging Markets report. Other key highlights:

  • Proportionally, EM-focused fundraising peaked in 2011 at 51% of funds closed and 40% of aggregate capital. This has fallen year-on-year to 2016, when they accounted for 20% of fund closures and 12% of total capital raised. 

  • By fund type, EM-focused venture capital, buyout and growth funds have all raised similar levels of capital since 2008 ($128 billion, $174 billion and $188 billion respectively). However, twice as many venture capital funds have closed (1,511) compared to growth funds (842). 

  • Among emerging markets, the majority of activity is focused on Greater China. The region is home to 883 private equity fund managers and 224 investors in the asset class. 
  • Similarly, funds focused on Greater China have raised $441 billion since the start of 2008, compared to $45 billion for Latin America-focused funds, the second-highest total.
  • Looking ahead, a fifth of global investors reported that they intended to increase their allocation to private equity in emerging markets in 2017. Just 5% indicated they intended to decrease their exposure, in line with appetite for other regions. 

“The private equity industry in emerging markets faces a set of challenges that can at times be quite different from those facing the more developed markets of Europe and North America,” said Christopher Elvin, head of private equity products for Preqin. “Slowing growth and rising debt in China, political and economic upheaval in Brazil, Venezuela and Argentina, and instability in Eastern Europe and the Middle East all put pressure on private equity operators in those regions. 

“However, this underlines the success of the asset class to have doubled in size over the past six years,” he added. “Robust performance and recent net capital flows to investors have proved that emerging markets-focused vehicles can offer real returns on investment. While fewer investors view emerging markets as presenting the best opportunities compared to Europe or North America, if EM-focused funds can maintain their strong performance we may see that gap narrow in coming quarters.” 

Founded in 2003, Preqin is a leading source of information for the alternative assets industry, providing data and analysis via online databases, publications and bespoke data requests. The company's Hedge Fund Online service is a leading source of intelligence on the hedge fund industry, with performance information for over 16,000 hedge funds across strategies and geographies. More than 47,000 professionals in 90 nations use the company’s products.

In Depth

bfinance: Interest Grows In Active Currency Management As Climate Improves

Jun 29 2017 | 11:25pm ET

Institutional investors are taking a more active approach to managing portfolio-...


CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

Maglan Capital: Some Lessons Learned From Puerto Rico

Jul 13 2017 | 8:00pm ET

Although Maglan Capital has not been invested in Puerto Rico for more than three...


From the current issue of