Private Equity Firms Target Experts in Emerging Markets
With the increasing role of globalization in the financial industry, private equity firms are increasingly targeting emerging markets. According to the latest research compiled by the Emerging Markets Private Equity Association (EMPEA), fund raising in the region is on pace to hit a record high this year. Michael Hartnett, Merrill Lynch Global Emerging Markets Strategist says, “The underlying fundamentals are strong: the asset class is undercapitalized, underleveraged, under-owned and undervalued.” As a result, private equity opportunities are growing for professionals with emerging markets expertise. Executive recruiter, A.E. Feldman, reports that emerging markets are important right now in the money management business and firms want people who can understand companies in these regions on a ground level basis.
Emerging markets have received increasing interest from some of big global private equity firms, including KKR, TPG, Carlyle and Blackstone. These global players are attracted by strong economic growth, reasonable valuations and the availability of debt financing. Pension funds are also funneling money into new private equity partnership investments. Calpers, the nation’s largest public pension fund with assets totaling $246.7 billion, said back in February it plans to contribute $400 million to emerging markets private equity investments in eastern Europe, Latin America and Asia.
Private equity funds focused on investing in the emerging markets of Asia, Europe, Latin America, the Middle East and Africa reached $29 billion in the first eight months of 2007 - more than 85% of the total for all of 2006, according to the EMPEA. The group’s President, Sarah Alexander, says, “We expect 2007 to be another record-breaking year for emerging market private equity fundraising. A number of funds held significant closes later in the summer, and several large funds are expected to close by year’s end.”
Latin American funds raised $1.4 billion in the first six months of 2007, according to the EMPEA. The group reports that funds in the Latin American region are poised to beat the $3.6 billion raised by private equity funds nine years ago. Funds focused in Asia also raised $11.6 billion in the first six months of this year, compared with $19.4 billion for all of 2006. Meanwhile, the EMPEA says funds focused in Africa raised $592 million in the first half of this year. In a limited partner survey, 19% of respondents said they are opportunistically investing in Africa, compared with just 3% last year. The group predicts that 2007 could be a “watershed year for fundraising in the region.”
