Of the 710 investors tracked by Preqin’s Investor Intelligence online service looking for fund opportunities immediately, a quarter are specifically seeking to commit to vehicles with a focus on emerging markets. These 180 LPs expect to commit on average between $274mn and $427mn over the next 12 months. This is indicative of a sustained and healthy appetite from the private equity investor community despite some concerns this year over the economic viability of investing in the emerging markets, stemming from worries about the impact of slowing growth, political problems and currency devaluations in various emerging market nations.
The majority of investors looking to commit immediately to emerging markets-focused funds are based in developed economies, with over half (54%) based in North America. Just under a quarter (24%) are based in West Europe, and a further 7% of LPs looking to commit to funds with a focus on emerging markets are based in the Nordic region. Within emerging markets, 4% of investors looking to commit to funds within the region are based in the Far East, followed by South America (3%) and the Middle East (2%).
Fund of funds managers account for 38% of investors looking to commit to vehicles with a focus on emerging markets, followed by public pension funds (18%). Government agencies and private sector pension funds both account for 8% of investors, followed by endowments (7%) and foundations (6%). The majority of investors looking to commit immediately to funds within emerging markets will commit to funds raised by a spin-off management team (44%). A fifth (20%) of investors will commit to a pure first-time fund, while 11% will consider doing so. This is reflective of the relative under-development of the private equity market within emerging economies.
The opportunities to be found under the broad ‘emerging markets’ umbrella is exemplified in the various commitments that investors across the globe have recently made, in funds targeting different emerging markets and pursuing different strategies. New York State Teachers’ Retirement System committed $100mn to CVC Capital Partners Asia Pacific IV, a buyout vehicle which will invest in countries in South East Asia, including China and South Korea. African Development Bank recently committed $50mn to Carlyle Sub-Saharan Africa Fund, while Princeton University Investment Company made a commitment to Qiming Venture Partners, a China-focused venture capital vehicle.