Investors worldwide poured $25 billion into emerging market private equity funds between January and April. The pace is on track to top last year’s total despite a downturn in developed markets, a report revealed.
The present level of fund-raising suggests $75 billion will be raised for emerging-markets funds worldwide throughout 2008. That compares with $59 billion in 2007, according to Washington, D.C.-based
“[Limited partners] who have stayed out of emerging markets due to perceptions about exceedingly high risks or transaction costs that erode any return advantage may be rethinking their private equity portfolio strategies,” said EMPEA President Sarah Alexander in a statement.
EMPEA reported that 74% of private equity participants surveyed expected to increase commitments to emerging market private equity funds over the next three to five years, with one-third of the respondents pointing to improvements in political and economic risk as the main reason for this.
The EMPEA report said Asia continued to dominate, particularly China and India, but with Latin America, Africa and the Middle East also attracting great interest from investors. —Thomson Reuters wire report
3i’s asset value rises
U.K.-based buyout firm
The value of 3i’s investments rose to $19.1 billion, from $13.6 billion a year earlier, it said. The company’s return on investments however fell to 18.6%, down from 26.8% a year earlier.
Buyout firms have struggled to borrow the funds to continue doing deals during the recent credit crunch after several years of record opportunities and a cheap debt-fuelled M&A boom that lasted until mid-2007.
“With so much uncertainty still clouding economic prospects in the major economies we take a cautious view of the coming year,” the firm said in a statement. However, 3i added it hopes to counter this outlook by taking a “highly selective approach to investments.” —Thomson Reuters wire report
Blackstone reports loss amid turbulent markets
Publicly traded private equity firm
The loss of nearly $94 million, excluding income taxes, non-cash charges for vesting equity-based compensation and amortization of intangible assets, compares with a year-earlier profit of about $958 million. Blackstone prefers to focus on this measure that it calls “economic net income,” because of the huge payouts associated with its more than $4 billion IPO last summer.
“Turbulent markets throughout the world persisted in the first quarter, affecting virtually all asset pricing across credit and equity markets,” CEO Stephen Schwarzman said in a statement.
This meant lower carrying values for some investments, he said, but also resulted in declining purchase prices for new deals. —Thomson Reuters wire report
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