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Private Equity Fundraising in the BRIC Region – January 2015

by Matthew Morris

  • 23 Jan 2015
  • PE

Back in 2001, the term BRIC was coined for the awakening economic giants of Brazil, Russia, India and China. Fourteen years on, we now see that all four economies are part of the top 10 countries as ranked by nominal GDP, according to the World Bank. In the private equity world there has been a fluctuating interest surrounding these four players, with macroeconomic and geopolitical factors often causing uncertainty within these regions. Last year saw some notable examples of current Russia-focused fundraising struggles, with reports that Blackstone Group was to stop seeking investments in Russia and DMC Partners decided to abandon their $2bn fund. 

As shown by Preqin’s Funds in Market online service, BRIC-focused fundraising last year, as part of a wider geographical focus, was at its lowest level since 2010, with 146 funds collecting almost $65bn. The average size of BRIC-focused funds in 2014 fell compared to the previous year, down to $501mn from $520mn. The largest fund closed in 2014 with a partial focus on the BRIC region was Blackstone Real Estate Partners Asia fund that would be investing in both India and China, among others, amassing $5bn. This too was down on the largest fund size targeting the region in 2013, Apax VIII, which raised €5.8bn.

Interestingly, compared to 2013 fundraising, China and India saw an increase in the amount of capital targeting the region as part of a wider geographical focus. While China saw a 15% increase in capital directed towards the region, it is India that has seen the largest increase (34%). Russia and Brazil fared worse, however, with Brazil attracting $14bn less capital than the previous year. Russia only managed to attract capital from 11 funds that reached a final close in 2014, with these vehicles gathering $1.5bn, as shown in the graph above. Brazil and Russia’s deteriorating attraction seems to lie behind the BRIC region’s dip in fundraising, counterweighting any growth achieved by the Asian contingent. 

Currently, there are 357 funds in market looking to invest within the BRIC region as part of a wider geographic focus, targeting a total of $127bn. Tense conditions in Russia, combined with sliding worldwide economic growth forecasts for 2015 may mean that funds targeting the BRIC region face tough fundraising conditions going forward. Nevertheless, with a combined population of just under three billion, the BRIC region still provides fantastic opportunities for growth and innovation.

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