GLOBAL - Private equity investment in emerging markets is again on the rise, with a 55% year-on-year increase over the first half of the year, research shows.
Data compiled by the Emerging Markets Private Equity Association (EMPEA) found fresh investment in the area stood at $13bn for the first six months of 2010, compared with $8bn at the same time last year.
EMPEA said the total value of private equity investments made in the first two quarters of 2010 was $4.5bn more than that invested through the same period last year, led by an investment surge in Latin America and continued strong activity levels in China and India.
Fundraising levels are also showing signs of rebounding, with $11bn raised in the first half of 2010 compared with $9bn over the same period last year.
Asian funds continue to account for more than half of the total (55%), with China continuing as the leading destination for new capital. China-dedicated funds accounted for two-thirds of the 46 Asian funds that raised capital through mid-year, 60% of the total capital raised for Asia, and one-third of the total capital raised for emerging markets during that period.
Sarah Alexander, president and chief executive officer of EMPEA said investment conditions in emerging markets private equity were revitalising.
"There are more and better quality deals in the pipelines; the continued easing of price expectations among sellers means managers have been more successful in closing transactions," Alexander said. "Emerging market fund managers are increasingly bullish in light of stabilizing markets and lower valuations.
"We expect this confidence will play right through the cycle the rest of this year. Investors remain cautious in their allocation to new funds, but we anticipate that fundraising levels will continue to pick up on the back of this more active investment environment.
"Prospective and undecided investors are looking for indications of improved liquidity, to support the promise of managers' ability to generate cash flow."
Beyond Asia, notable rises in Sub-Saharan Africa and Latin America accounted for a significant portion of the overall increase in capital raised, the survey found.
"African funds raised through June already exceeded the full year 2009 total, and some sizeable funds being raised point to a return to pre-crisis levels," said Alexander.
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