LPs are increasingly targeting private equity opportunities in emerging markets

by Tom Carr

  • 23 Aug 2011
  • PE

Increasingly, institutional investors are allocating a larger proportion of private equity portfolios to opportunities in emerging markets, as growth in emerging regions continues to eclipse many developed markets. Preqin’s Investor Intelligence database currently tracks 3,339 active institutional investors in private equity (excluding funds of funds managers) and of these 28% have indicated an interest in investing in emerging markets.

Preqin recently interviewed a sample of 100 global institutional investors in private equity, excluding funds of funds managers, on their attitudes and preferences regarding the private equity asset class. Of those interviewed, 78% would consider investing in emerging markets; furthermore, 61% of LPs expect to increase their exposure to such regions in the longer term with the remaining 39% expecting to maintain their allocation to emerging markets. This suggests that private equity investments in emerging markets are set to continue expanding in the coming years.

The highest proportion of institutional investors with an interest investing in emerging markets is represented by public pension funds, which make up 18% of the total universe. This is followed by endowment plans and foundations, which each make up 12% of the total number of investors that have a preference for investing in emerging markets.  When looking at the location of institutional investors with an interest in gaining exposure to emerging regions, 50% are based in North America, 31% are based in Europe, with the remaining 19% being based in Asia and rest of world.

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