Capital International Raises $3B Emerging Markets Fund

By Stephen Aldred

Capital International Private Equity Funds of Hong Kong has closed a $3 billion global emerging markets private equity fund, the largest fund of its kind in five years.

Funds raised to invest in emerging markets are steadily increasing, according to figures from research firm Preqin, as investors look to tap economic growth outside established markets.

The new fund, Capital International Private Equity Fund VI (CIPEF VI), is targeting 15 to 20 investments in emerging markets countries and has already invested one fifth of its capital.

“We have no ’must do’ countries or sectors,” said Lam Nguyen-Phuong, CIPEF co-founder and senior managing partner.

Investments made from the new fund include Eaton Towers, a pan-African telecom tower and development company, and L&T Financial Holdings Limited, the infrastructure and equipment affiliate of India’s Larsen & Toubro Limited.

CIPEF VI, which exceeded its target of $2.5 billion and met its hard cap of $3 billion, is the largest global emerging markets private equity fund closed in the last five years, according to the Emerging Markets Private Equity Association.

The largest private equity fund raised for global emerging markets is the $5 billion Sharia Fund of Funds raised by BMB Capital in 2006, according to Preqin.

Rankings can vary though, and some emerging markets funds in Asia may invest in both developing and developed markets.

Some 284 funds closed last year aiming to invest in emerging markets, said Preqin, with $69 billion in committed capital. That is up from the $40 billion raised by 210 funds in 2009, but still lags the $117 billion raised in 2008.

The CIPEF VI fund raised raised capital from over 60 institutional investors, including the Ohio Public Employees Retirement System, Oregon Public Employees Retirement Fund and Pennsylvania Public School Employees’ Retirement System.

MVision Private Equity Advisers was the placement agent and strategic advisor, and Debevoise & Plimpton LLP was legal counsel.

CIPEF, the private equity arm of institutional investment manager Capital International, has invested in 78 portfolio companies with 59 full or partial exits since 1992.

(Stephen Aldred is an Asia private equity correspondent for sister news service Reuters; editing by Edwina Gibbs)