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Private Equity Investing in BRIC Economies

by Ben Formela Osborne

  • 14 Sep 2009
  • PE

Over the past decade, the private equity industry has been paying increasing attention to the fast-growing developing economies of Brazil, Russia, India and China, as these countries seek to unlock their potential as global economic powerhouses by opening their economies and reforming regulation. Preqin data reveals how BRIC focused private equity investing has changed since the onset of the global recession.
 
To date in 2009, 39 private equity funds focused on investing in at least one of Brazil, Russia, India or China have achieved a final close securing $22.3 billion in aggregate capital commitments. On this projection through to the end of the current year 2009 looks set to be a less prosperous year for BRIC focused funds compared with 2008 when 145 private equity funds closed with $87.3 billion in committed capital. Reflecting one year further, 2007 saw more BRIC focused funds reaching a final close but with less aggregate capital than in 2008, with 164 private equity funds closed securing $74.1 in the process.

Our data confirms that China is attracting the most capital of the four giant developing economies. From 2007 to date, (in addition to the generalist funds that invest sporadically in more than one BRIC country) 120 private equity funds focused solely or predominantly on China achieved a final close, drawing over $60 billion in commitments. This was followed by India, which secured $27.8 billion from 100 funds, Brazil with $15.4 billion from 31 funds, and Russia with $9.8 billion from 30 private equity funds. This pattern is replicated even when isolating the figures to show fundraising only during 2009 to date, with China once again leading the way with almost $7 billion raised from 15 private equity funds closed. India has attracted less than half of China’s proceeds, with $2.2 billion collected from 10 private equity funds.

Despite the deceleration in BRIC investing as private equity fund managers seek to reduce risk in the current tumultuous market, Preqin will continue to monitor private equity investment in BRIC economies as work persists to surmount the bloc’s complex operating environments and regulatory structures.

For more information on private equity fundraising, please see Preqin’s Funds in Market product.

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