From 2008 to the end of 2009, global emerging market private equity-backed deal-flow decreased by over 50%, going from $23.8bn down to just $11.3bn in the period; however, from 2009 onwards private equity investment inflows into emerging markets have steadily increased.
In 2010, aggregate private equity deal-flow grew by 76% over 2009 figures to $19.9bn and so far this year it has reached $17.6bn, an amount that is close to surpassing last year’s figure. The number of private equity-backed buyout deals announced in 2011 YTD is already up by 3% on 2010 levels. The sector that is witnessing the largest number of private equity deals across all emerging markets is the industrials sector, followed by the consumer and business services sectors.
As the developed world continues to experience anaemic economic growth and depressed markets, private equity firms have had to cast their nets wider to other regions. TPG, Apax Partners and Advent International are the three firms that have put the most capital to work this year across all emerging market economies, investing an aggregate $4.2bn.
Although private equity capital has tended to gravitate towards the BRIC economies (Brazil, Russia, India and China) in recent years, emerging countries such as Poland and South Africa are also becoming fertile ground for private equity investment. Both countries have harvested $1.4bn and $1.3bn in private equity investment in 2011 YTD, respectively. This amount of deal-flow for both countries is up significantly on 2010 and 2009 figures.
Poland’s largest PE-backed deal recorded in 2011 was for Emitel, a Kraków-based radio, TV and communications provider, which was acquired by Montagu Private Equity from Telekomunikacja Polska. The deal was valued at PLN 1.725bn ($588mn), 11.2x Emitel’s 2010 earnings before interest, taxes, depreciation, and amortization (EBITDA).
The acquisition by Brait Private Equity for Pepkor Holdings Limited in March 2011 was the largest South Africa-based private equity-backed buyout deal completed year to date. Brait Private Equity paid ZAR 4.178bn ($586mn) for the retail-focused company which valued the business at an EBITDA multiple of 7.4.