Preqin’s latest report on private equity in emerging markets (EM) finds that the total assets held by managers based in these regions have increased year-on-year to approach $300bn as of September 2015, the latest data available. The combined AUM of EM-based managers did not see much growth in 2014, rising from $248bn at the end of 2013 to $258bn a year later. Since then, however, total assets have risen $39bn in nine months, to hit record highs.
This increase in AUM comes despite the growing interest shown in emerging markets by fund managers based outside of these regions. The proportion of aggregate emerging markets-focused capital which was raised by managers based in these regions peaked in 2011, when they accounted for 77% of the $69bn raised. Since then, the proportion has fallen year-on-year, and in 2015 EM-based managers accounted for 49% of the $40bn raised. In 2016 YTD, EM-based managers have accounted for just a third (33%) of the total capital raised for emerging markets, an all-time low.
“Emerging markets have developed significantly over the past decade; as many more developed markets have seen slower growth in the wake of the Global Financial Crisis, some economies in emerging regions maintained double-digit growth rates. As such, private equity funds focused on these regions have been able to capitalize on opportunities, and the total assets held by these funds is now just less than $300bn. Recent years have also seen increased participation in emerging markets from international GPs, which are attracted by the robust underlying demographics and potential for strong returns. While managers based in these regions may struggle to compete with the resources of larger market entrants, they might be able to leverage their in-depth local understanding of these markets in order to attract investors.” Says Christopher Elvin, Head of Private Equity, Preqin.