Preqin’s Buyout Deals Analyst shows that so far this year there have been 217 private equity-backed buyout deals in emerging markets, valued at an aggregate $11.9bn. This is a 33% decrease in the number of buyout deals and a 41% drop in the aggregate deal value compared to this time last year. In 2013 YTD, buyout deals in emerging markets represent 12% and 6% of the number and aggregate value of buyout deals globally respectively. The largest deal announced in the region this year was the buyout of the South Korean insurance unit of ING by MBK Partners, valued at $1.65bn.
In terms of location, in 2013 YTD China and South Korea have reported the largest proportion of buyout deals in emerging markets by aggregate value, with buyout investments in both countries each representing 25% of the value of all private equity-backed buyouts in emerging markets. Investments in India account for 18% of the total value; Indian buyout deals also represent the largest proportion of buyout deals in emerging markets by number, at 41%.
Examining buyout deals in emerging markets in 2013 YTD by industry, business services have made up 22% of these buyout deals in terms of number of deals, closely followed by industrials, which have accounted for 20% of buyout deals. The prominence of these two industries appears to be a continuing trend within private equity-backed buyout deals in emerging markets, with business services contributing 20% and industrials 17% to the total number of buyout deals in emerging markets over the period 2006 to present.
Interestingly, the global financial crisis has affected emerging market buyout deals differently than private equity-backed buyout deals on a global scale. Globally, the average size of buyout deals dropped by 55%, or $333mn, between 2007 and 2008; in emerging markets the average deal size grew by 18%, or $38mn, over the same time period. However, more recently, emerging market buyout deal size has been steadily declining; there has been a 27% decrease in the average size of buyout deals in emerging markets from 2010 to present, compared to a steady increase of 21% in average size for buyout deals globally.