This month has seen important events occur in countries that are part of the frontier market, with developments such as Nigeria celebrating the beginning of its first democratic transfer of power, and Tunisia seeing its credit score upgraded from negative to positive by Fitch Ratings. This blog will take a look at the fund managers based in frontier markets, as defined by FTSE’s Global Equity Index Series classification*.
The table above displays the five largest private equity fund managers, by aggregate capital raised in the last ten years, that are based in a frontier market. According to Preqin’s Fund Manager Profiles product, there are 177 fund managers headquartered in frontier markets. Over the last decade, these fund managers have raised just under $16.6bn in capital commitments, with approximately 27% of that capital remaining as dry powder. In comparison, Preqin currently tracks 1,403 fund managers that are based in an emerging market, including larger nations such as Russia and a small crossover of countries under the frontier banner. GPs in emerging countries secured 16 times the amount raised by their peers in the frontier market, accumulating $272.7bn in aggregate capital over the decade.
Of the 177 fund managers based in the frontier market, 44% of them are venture capital investors, while 30% participate in growth transactions and 13% focus predominantly on buyout investments. Managers that utilize growth as their main investment strategy have raised the most capital over the decade, accounting for $6.8bn of the total capital commitments. The largest of these managers is Qatar Abu Dhabi Investment Company (Qadic), a joint venture between International Petroleum Investment Company (IPIC) and Qatar Investment Authority, which makes both direct and indirect investments in the energy and related sectors. With a global outlook, the firm is not solely focusing its attention on its own region’s economic development, but also on economies abroad.
*Countries under the frontier market umbrella are: Argentina, Bahrain, Bangladesh, Botswana, Bulgaria, Cote d’Ivoire, Croatia, Cyprus, Estonia, Ghana, Jordan, Kenya, Lithuania, Macedonia, Malta, Mauritius, Nigeria, Oman, Qatar, Romania, Serbia, Slovakia, Slovenia, Sri Lanka, Tunisia and Vietnam