Preqin’s Investor Intelligence online service tracks 152 private equity fund of funds vehicles currently in market, 23 of which include BRIC countries within their geographic foci. In total, these 23 funds are targeting an aggregate $5.5bn and are investing in a range of underlying fund types, including buyout, venture capital and growth. The majority (83%) of these 23 funds of funds focus predominantly on making primary commitments to underlying funds, although a significant proportion (57%) also allocate some capital for purchasing fund interests on the secondary market, and for making direct investments.
A dissection of the geographic focus of these funds of funds reveals that China is the most prevalent investment destination of all countries in the BRIC region, with Russia and Brazil trailing quite far behind. A majority (71%) of the funds of funds in this sample target opportunities in China, compared to 50% looking to invest in India-focused underlying vehicles, and only 17% seeking opportunities in Russia and Brazil. The particular preference for investing in China and India parallels the fact that 43% of the funds of funds are being raised by Asia-based managers, with the majority of these managers (78%) based in China.
Of these funds of funds that target opportunities in the BRIC region, GC Oriza Fund of Funds is the largest vehicle currently raising capital, with a target of CNY 5bn ($772mn). The fund aims to invest 100% of its capital in venture capital vehicles focusing on opportunities in Chinese small- and medium-sized enterprises. GC Oriza Fund of Funds is being raised as a joint venture between China Development Bank (CDB) and Oriza Holdings.
AXA Capital Asia III and Siguler Guff BRIC Opportunities Fund III are both aiming to raise $500mn each, and focus on investment opportunities within the BRIC region. AXA Capital Asia III, raised by French fund of funds manager Ardian (formerly AXA Private Equity), targets a range of Asia-focused funds, including opportunities in India and China. Siguler Guff BRIC Opportunities Fund III targets opportunities in all four BRIC countries, although it aims to invest predominantly in Chinese opportunities.