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Private Equity Investment in the BRIC Region – September 2012

by Philippe Alteirac

  • 04 Sep 2012
  • PE

While some of the most advanced economies in the developed world, particularly in the eurozone, continue to be affected by the precarious financial climate, the BRIC countries have emerged as one of the fastest growing regions in the world. Brazil, Russia, India and China are becoming increasingly popular regions for private equity investors around the world as they unlock their potential as global economic powerhouses.

Preqin’s Investor Intelligence database currently tracks 186 BRIC-based LPs investing in private equity, representing 4.2% of the limited partner universe. China hosts the largest number of investors within the BRIC region (49%), followed by India (27%), Brazil (25%), and Russia (3%).

The BRIC region also continues to provide strong investment opportunities for LPs based elsewhere throughout the world. Preqin’s Investor Intelligence database currently tracks 1,031 LPs which have previously made private equity commitments to funds focusing on opportunities in the BRIC region.  Furthermore, Preqin’s most recent Private Equity Investor Outlook report reveals that LPs believe the BRIC countries are currently presenting favourable investment opportunities within emerging markets. A significant 38% of investors named China as presenting the best opportunities within emerging markets, followed by India which was named specifically by 29%. Furthermore, 21% of LPs feel that Brazil is a favourable investment destination, while 5% named Russia.

An example of LPs to have recently committed to funds focusing on opportunities in the BRIC region include the US government agency International Finance Corporation,  which has committed $25mn to BanyanTree Growth Capital II, which is a mezzanine fund focused on financing fast growing small and medium-sized enterprises in relatively neglected sectors of the Indian economy.  Another US-based government agency that has committed to a BRIC-focused fund is Overseas Private Investment Corporation, which recently committed $66mn to DGF Capital 3, a growth fund designed to provide growth capital to small and medium-sized enterprises in Brazil.

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