Emerging market worries have risen in recent weeks as money raced out of developing economies in the wake of the U.S. Federal Reserve’s decision to ease its monetary stimulus.
Turns out venture funds operating in these markets were feeling the pain several months before that. This seems evident from the performance of two emerging market and international portfolios at the California Public Employees’ Retirement System.
The vast majority of the venture and venture-related funds in the portfolios watched their returns slide in the first half of last year, just as the exits market in the United States started to look up.
CalPERS holds 20 emerging markets and overseas funds in its 57 Stars Emerging Markets Fund and EMAlternatives portfolios. The funds have vintages of 2007 to 2009 and their fund types vary from early to balanced to late stage. Fifteen saw performance declines from December 2012 to June 2013, according to the pension manager’s most recent public portfolio report.
The portfolios overall are performing reasonably well. Fifteen of the funds have IRRs that are in positive territory and five do not. The range from top to bottom is fairly large.
The top-performing fund is Giza Venture Fund V from 2008, which had an IRR of 34.3% as of June and an investment multiple of 1.9x. Distributions from the fund are substantial.
The Turkish Private Equity Fund II also is a strong performer. The 2008 fund’s IRR was roughly 19% in June, though distributions were nowhere near the same level.
Actis Africa 3 also has shown a solid performance, according to the portfolio report updating fund returns to June 2013. However its IRR of 15.1% lost some ground over the prior six months.
The most improved funds are China based. DT Capital China Growth Fund and CDH Ventures Partners Fund 2 both advanced.
Among the funds with significant declines are Baring India Private Equity Fund III, Pacific Road Resources Fund and Actis India 3. Samara Capital Partners Fund I also lost ground.
The accompanying table lists the funds with their distributions, IRRs and investment multiples.