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Private Equity-Backed Buyout Investments in the BRIC Nations 2006-2014 YTD

by Catriona McCarron

  • 28 May 2014
  • PE

Since 2006, Preqin’s Buyout Deals Analyst has recorded 1,817 private equity-backed buyout deals within the BRIC nations; with an aggregate $123bn invested in the region since 2006. Over half (52%) of the aggregate deal value has been invested in China-based portfolio companies, while India experienced the largest number of private equity-backed deals in the region, accounting for 48%. 

When analyzing buyout investments in the BRIC nations on an annual basis by country, the figures show that India has commanded the majority of private equity-backed buyout deal transactions since 2011, peaking in 2013 when private-equity backed investments in Indian companies accounted for 55% of all such deals in the BRIC region. So far during 2014, investments in Indian companies have accounted for 46% of the number of deals, while Brazil has accounted for 15% of total number of deals so far this year, a rise of four percentage points compared to 2013 and the highest proportion since 2010. China has also experienced an increase compared to 2013, accounting for 31% of the total number of private equity-backed deals so far this year, an increase of five percentage points on last year. 

The proportion of aggregate deal value in China is at its highest since 2009, accounting for 79% of total capital invested by private equity firms in the BRIC nations so far in 2014, with the announced privatization of Giant Interactive Group, Inc. by Baring Private Equity Asia and Hony Capital, valued at $3bn, accounting for 32% of China’s aggregate deal value of $9.5bn so far this year. Meanwhile, Brazil has experienced a rise of six percentage points in terms of proportion of aggregate deal value compared to 2013, accounting for 9% of the aggregate value of private equity-backed buyout deals in the BRIC nations. The $1.03bn invested in Brazilian portfolio companies so far this year is nearly double the $505mn invested in the whole 2013. 

In terms of deals by type, growth capital buyout deals have been the most dominant investment style in the BRIC nations since 2007, with the proportion of total number of deals averaging 41% in 2007-2014 YTD. So far this year, growth capital transactions have accounted for 29% of total number of deals within the BRIC region, followed by leveraged buyouts (LBOs) at 24%.The highest proportion of aggregate value for private equity-backed buyout deals in the BRIC nations, is on average, through LBO transactions. However, 2014 YTD has seen public to private deals trump LBOs at 34% of total deal value, largely due to the Giant Interactive Group, Inc. contributing a quarter of aggregate deal value so far this year. 

Of the 85 private equity-backed buyout deals taken place in the BRIC countries so far in 2014, 20% have been in portfolio companies in the consumer and retail industry, which has been the most prominent industry in terms of number of deals since 2012. However, consumer and retail came second to information technology in terms of aggregate deal value so far in 2014, with $1.7bn invested in consumer and retail portfolio companies, $3.8bn lower than information technology companies.

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