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Private Equity Fund of Funds Managers' Interest in Central and Eastern European Opportunities

by Francesca Braganza

  • 21 Feb 2014
  • PE

Deciding which countries and regions to gain exposure to through private equity investments is an important decision for investors seeking diversification and strong returns in their investment portfolios. Preqin’s Investor Intelligence online service currently tracks 289 active fund of funds managers worldwide, 50 (17%) of which will invest in funds focusing on opportunities in Central and Eastern Europe. These firms have aggregate assets under management of $439mn, and of these fund managers, 56% are based in Europe, and 44% have their head offices in North America. Fund of funds managers seek exposure to Central and Eastern Europe as it offers enticing growth rates, although these are sometimes accompanied by higher risk factors that are typically associated with emerging and growing economies.

Of the Europe-based fund of funds managers with an interest in Central and Eastern European opportunities, AlpInvest Partners is the largest, with $50.5bn in private equity assets under management. The firm includes funds focusing on this region in its global approach to the asset class, and invests in a range of fund types through its funds of funds. AlpInvest Partners seeks exposure to Central and Eastern Europe through participating on the secondary market as well as making primary investments, as demonstrated by its Europe-focused funds of funds vehicle, AlpInvest Secondaries Fund V, which focuses primarily on opportunities within Europe.

Ardian has $36bn in private equity assets under management, and is the second largest Europe-based firm in this group. The fund of funds manager also has a global approach to investing in private equity, and invests in Central and Eastern Europe as part of its own investment strategy as well as through separate account mandates. A number of Ardian’s funds of funds have included Central and Eastern Europe within their geographic foci, including AXA Primary Fund Europe V and AXA Capital Europe.

Goldman Sachs AIMS Private Equity stands as the largest US-based private equity fund of funds manager that has an interest in investing in Central and Eastern Europe. The firm has $41bn in assets under management, and is an active participant in the private equity arena. Goldman Sachs AIMS Private Equity considers investing in funds focusing on Central and Eastern Europe as part of its strategy of building a portfolio of investments diversified by geographic focus.

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