Private Equity Investment in the BRIC Nations – April 2013

by Jessica Sutro

  • 03 Apr 2013
  • PE

With economic uncertainty continuing in more developed markets, many investors are increasingly looking to gain exposure to emerging markets in their private equity portfolios in order to achieve greater diversification and target potentially higher returns.

In Preqin's March 2013 Private Equity Spotlight, Preqin examined private equity investment in the BRIC nations (Brazil, Russia, India, China). Aggregate annual fundraising for private equity funds focused exclusively on the BRIC nations has consistently accounted for about a third of both the number of (33%) and aggregate capital raised (35%) by emerging markets-focused funds between 2006 and 2012.

BRIC-focused private equity fundraising saw a peak in 2011, with 174 funds targeting investments in these countries raising an aggregate $49bn. In 2012, 112 funds raised a smaller aggregate $23bn, closer to the fundraising levels seen in 2010, when 119 funds raised an aggregate $24bn in capital commitments from investors.

Exclusively China-focused funds have historically represented the largest proportion of capital raised for investment in the BRIC nations; in 2012 these funds accounted for 73% of the total capital raised by BRIC-focused funds. Comparatively, exclusively India focused funds only represented 10% of the capital raised by BRIC focused funds that closed in 2012.

The largest fund in market investing in one of the BRIC nations is CDH China Fund V. The China-focused fund targeting $2bn in capital commitments predominantly pursues growth opportunities and may also seek buyout opportunities on a case by case basis.

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