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PREQIN SPECIAL REPORT:PRIVATE EQUITY IN EMERGING MARKETSMAY 2018
© Preqin Ltd. 2018 / www.preqin.com2
PREQIN SPECIAL REPORT: PRIVATE EQUITY IN EMERGING MARKETS
FOREWORD 2017 was a landmark year for the global private equity industry. Record fundraising, the closure of the largest fund ever raised, record-high entry prices for assets and dry powder levels exceeding $1tn for the first time all dominated the headlines. But what of emerging markets?
Macroeconomic factors and geopolitical uncertainty remain key issues within emerging markets. Despite this, 2017 witnessed 388 funds reaching a final close, securing an aggregate $115bn – this is the second highest amount of capital raised in the last decade, falling just short of the record seen in 2014 when 513 funds reached a final close raising $120bn. The wider industry trend of capital consolidation is starkly apparent within emerging markets: 250 fewer funds held a final close in 2017 than in 2016, resulting in the average size of funds increasing from $240mn in 2016 to $388mn in 2017.
Along with this surge in fundraising, AUM of emerging markets-focused funds has increased by 33% between the end of 2016 and September 2017. This is a significant rise and can, in part, be attributed to Preqin’s additional research efforts to strengthen our coverage of the Chinese private equity market, with the opening of our Guangzhou office in October 2017. Another factor driving this surge in AUM is the increase in the number of state-backed China-based funds, which are playing a big role for the private equity market in the region.
Buyout deal activity remained robust in 2017: the number of deals was slightly lower compared to the previous year, but in line with ongoing high entry prices for assets, aggregate deal value was up 17% compared to 2016. The rise of venture capital in Emerging Asia continues, with the region home to 90% of all venture capital transactions in emerging markets in 2017 – aggregate deal value was 26% higher compared to 2016, reaching a record $79bn.
Emerging markets-focused funds have demonstrated the ability to deliver attractive returns. Median net IRRs have remained above 8% for 2006-2015 vintage funds, and top-quartile net IRRs have, with the exception of 2012 and 2013 vintages, remained above 20% for 2011-2015 vintages. Furthermore, in the first three quarters of 2017, aggregate capital distributed back to investors exceeded aggregate capital calls; should this continue, the ramifications for emerging markets will be significant.
This report provides a detailed look at the private equity environment in emerging markets, including fundraising, institutional investors, deals and performance, supplementing the information on Preqin’s online platform. For more information, please visit www.preqin.com or contact [email protected].
p3 Fundraising
p5 Fund Managers
p6 Investors
p8 Performance
p9 Buyout Deals & Exits
p10 Venture Capital Deals & Exits
p11 Africa
p12 Central & Eastern Europe
p13 Emerging Asia
p14 Latin America
p15 Middle East
All rights reserved. The entire contents of Preqin Special Report: Private Equity in Emerging Markets, May 2018 are the Copyright of Preqin Ltd. No part of this publication or any information contained in it may be copied, transmitted by any electronic means, or stored in any electronic or other data storage medium, or printed or published in any document, report or publication, without the express prior written approval of Preqin Ltd. The information presented in Preqin Special Report: Private Equity in Emerging Markets, May 2018 is for information purposes only and does not constitute and should not be construed as a solicitation or other offer, or recommendation to acquire or dispose of any investment or to engage in any other transaction, or as advice of any nature whatsoever. If the reader seeks advice rather than information then he should seek an independent financial advisor and hereby agrees that he will not hold Preqin Ltd. responsible in law or equity for any decisions of whatever nature the reader makes or refrains from making following its use of Preqin Special Report: Private Equity in Emerging Markets, May 2018. While reasonable efforts have been made to obtain information from sources that are believed to be accurate, and to confirm the accuracy of such information wherever possible, Preqin Ltd. does not make any representation or warranty that the information or opinions contained in Preqin Special Report: Private Equity in Emerging Markets, May 2018 are accurate, reliable, up-to-date or complete. Although every reasonable effort has been made to ensure the accuracy of this publication Preqin Ltd. does not accept any responsibility for any errors or omissions within Preqin Special Report: Private Equity in Emerging Markets, May 2018 or for any expense or other loss alleged to have arisen in any way with a reader’s use of this publication.
DEFINITIONS
‘Private equity’ includes buyout, venture capital, growth, turnaround, balanced, co-investment, co-investment multi-manager, direct secondaries, PE secondaries and PE fund of funds. It excludes private debt, real estate, infrastructure and natural resources.
‘Emerging markets’ includes all countries in Africa, Asia (excluding Hong Kong, Japan and Singapore), Central & Eastern Europe, Latin America (South and Central America and the Caribbean) and the Middle East (excluding Israel). For a full list of countries included in this report please contact [email protected].
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FUNDRAISING
Since 2014, when emerging markets-focused private equity fundraising
reached a record-high $120bn in capital raised, annual fundraising has exceeded $100bn in both 2016 ($105bn) and 2017 ($115bn), as seen in Fig. 1, with 2015 falling just short ($90bn).
The fundraising landscape has also witnessed an increase in the number of state-backed funds, most notably in China. In 2017, 13 China-based funds with state involvement reached a final close, raising an aggregate $42bn.
Capital consolidation has been seen across the whole private equity industry with emerging markets being no exception. While the level of capital raised has remained high over the past four years, the number of funds closed has decreased significantly, illustrating the success of fewer but much larger funds – nearly three in four funds closed in 2017 met or exceeded their target. The success fund managers are having in achieving fundraising targets stems from investor liquidity, largely due to the higher amount of capital distributed compared to capital
called up by emerging markets-focused funds (see page 8).
In terms of the global private equity fundraising landscape, emerging markets-focused funds dominated in the years immediately following the Global Financial Crisis (GFC) as investors looked for more diversification within their private equity portfolios. Since 2014, however, emerging markets have accounted for a steadily declining proportion of the number of funds and capital secured globally as investors have shifted their focus onto the
31%
38%
48%
55%
46%
40% 39%
48%
41%
32%
19%19%15%
33%
40%
30%
22%
31%
25% 24% 23%
8%
0%
10%
20%
30%
40%
50%
60%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018YTD
No. of Funds Closed Aggregate Capital Raised
Source: Preqin
Prop
ortio
n of
Tot
al
Year of Final Close
Fig. 2: Emerging Markets-Focused Fundraising as a Proportion of All Private Equity Fundraising, 2008 - 2018 YTD (As at April 2018)*
0
20
40
60
80
100
120
140
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018YTD
Africa Central & Eastern EuropeEmerging Asia Latin AmericaMiddle East Diversified Emerging Markets
Source: Preqin
Aggr
egat
e Ca
pita
l Rai
sed
($bn
)
Year of Final Close
Fig. 3: Aggregate Capital Raised by Emerging Markets-Focused Private Equity Funds by Geographic Focus, 2008 - 2018 (As at April 2018)*
329298
439
575
490 464513
707639
388
497631 58
91 72 69120 90 105 115
80
100
200
300
400
500
600
700
800
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018YTD
No. of Funds Closed Aggregate Capital Raised ($bn)
Source: Preqin
Year of Final Close
Fig. 1: Annual Emerging Markets-Focused Private Equity Fundraising, 2008 - 2018 YTD (As at April 2018)*
410
230
2,405174
1,508310
234 6921 6
313 47
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
No. of Funds Closed Aggregate Capital Raised($bn)
Other
Secondaries
Fund of Funds
Growth
Venture Capital
Buyout
Source: Preqin
Prop
ortio
n of
Tot
al
Fig. 4: Emerging Markets-Focused Private Equity Fundraising by Fund Type, 2008 - 2018 YTD (As at April 2018)*
© Preqin Ltd. 2018 / www.preqin.com4
PREQIN SPECIAL REPORT: PRIVATE EQUITY IN EMERGING MARKETS
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
No. of FundsRaising
Aggregate CapitalTargeted
DiversifiedEmerging Markets
Middle East
Latin America
Emerging Asia
Central & EasternEurope
Africa
Source: Preqin
Prop
ortio
n of
Tot
al
Fig. 6: Emerging Markets-Focused Private Equity Funds in Market by Geographic Focus (As at April 2018)*
0%10%20%30%40%50%60%70%80%90%
100%
EmergingMarketsFocused
DevelopedMarketsFocused
EmergingMarketsFocused
DevelopedMarketsFocused
No. of FundsRaising
Aggregate CapitalTargeted
Other Private Equity
Secondaries
Fund of Funds
Growth
Venture Capital
Buyout
Source: Preqin
Prop
ortio
n of
Tot
al
Fig. 7: Emerging Markets- vs. Developed Markets-Focused Private Equity Funds in Market by Type (As at April 2018)*
lower-risk developed markets which have also seen strong returns (Fig. 2).
REGIONS TARGETED As seen in Fig. 3, Emerging Asia has long dominated in terms of private equity capital targeting emerging markets: since 2008, eight of every 10 dollars raised for investment in emerging markets has been focused on Emerging Asia. The proportion of total emerging markets capital earmarked for Emerging Asia increased from 74% in 2009-2013 to 86% in 2014-2018 to date – 91% of all capital secured for investment in emerging markets in 2018 so far will target Emerging Asia.
Much of the growth seen in the annual level of aggregate capital raised by emerging markets-focused private equity funds has therefore been driven by funds targeting Emerging Asia, with these vehicles securing over $100bn in 2014 ($103bn) and 2017 ($102bn).
Away from Asia, funds targeting investment in Latin America have raised an aggregate $47bn since 2008 – the second highest total among the emerging regions. However, more recently the region’s share of annual emerging markets-focused fundraising has been decreasing, falling from 11% in 2011 to 2-3% since 2015.
FIRMS TARGETING EMERGING MARKETS Historically, the vast majority of emerging markets-focused private equity vehicles have been raised by managers based in these markets, with international managers
responsible for roughly one-fifth of emerging markets-focused funds closed since 2008 (Fig. 5). However, developed markets-based managers have accounted for 37% of funds closed so far in 2018, the highest proportion on record. Despite this increase, only one of the 10 largest funds closed in 2018 so far is managed by a firm headquartered outside the emerging markets: California-based B Capital Fund, reached a final close on $360mn in February 2018, exceeding its $250mn target size to focus on early growth-stage venture capital investments in B2B technology companies in Asia and North America.
OUTLOOKThere are 970 emerging markets-focused private equity funds on the road as at
April 2018, seeking an aggregate $338bn in capital commitments. The universe of emerging markets-focused funds currently in market shares a similar make-up with that of the longer-term trend: Emerging Asia represents the vast majority of funds in market, with 668 funds targeting $288bn for investment in the region (Fig. 6). Although venture capital dominates the number (462) of funds on the road, growth strategies represent the greatest share (49%) of capital targeted by emerging markets-focused funds on the road (Fig. 7). By comparison, buyout vehicles account for the largest proportion (39%) of aggregate capital targeted in developed markets.
74% 76% 82% 86% 83% 76% 80% 85% 84% 79%63%
26% 24% 18% 14% 17% 24% 20% 15% 16% 21%37%
0%10%20%30%40%50%60%70%80%90%
100%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018YTD
Developed Markets-Based Fund ManagersEmerging Markets-Based Fund Managers
Source: Preqin
Prop
ortio
n of
Fun
ds C
lose
d
Year of Final Close
Fig. 5: Emerging Markets-Focused Private Equity Funds Closed by Firm Location, 2008 - 2018 YTD (As at April 2018)*
*Due to Preqin’s additional research efforts to strengthen our alternative assets data in China, fundraising figures have increased significantly as we aim to be more reflective of the industry.
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FUND MANAGERS
50%42%
30%34%
9% 13%
6% 7%6% 5%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Emerging Markets-Based Fund Managers
Developed Markets-Based Fund Managers
9 Funds or MoreRaised Previously
6-8 Funds RaisedPreviously
4-5 Funds RaisedPreviously
2-3 Funds RaisedPreviously
First-Time FundManager
Source: Preqin
Prop
ortio
n of
Fun
d M
anag
ers
Firm Headquarters
Fig. 9: Private Equity Fund Manager Experience by Firm Headquarters
Fig. 11: Largest Emerging Markets-Based Fund Managers by Aggregate Capital Raised for Private Equity Funds in the Last 10 Years*
Firm HeadquartersTotal Capital
Raised in Last 10 Years ($bn)*
SINO-IC Capital China 22.6
China Reform Fund Management Beijing, China 20.2
CCT Fund Management Beijing, China 19.6
China Aerospace Investment Holdings Beijing, China 17.4
Russian Direct Investment Fund Moscow, Russia 14.8
Source: Preqin
Fig. 12: Most Consistent Performing Emerging Markets-Based Private Equity Fund Managers
Firm Headquarters Average Quartile Rank
Trustbridge Partners Shanghai, China 1.00
Softbank China Venture Capital Shanghai, China 1.67
DGF Investimentos São Paulo, Brazil 1.75
Enfoca Inversiones Lima, Peru 1.80
CDH Investments Beijing, China 1.92
Source: Preqin
Fig. 8: Number of Emerging Markets-Based Private Equity Fund Managers by Sub-Region
Source: Preqin
*Includes capital raised by funds that have held at least one interim close.
Sub-Saharan Africa257
North Africa73
CentralAmerica
89 SouthAmerica
269
Caribbean24
GreaterChina2,084
Far East320
South Asia392
Central & Eastern Europe
413
Central Asia13
Middle East202
3% 5% 2% 4% 7% 7% 6%
52% 51%48%
82% 80%
58%79%
45% 44% 50%
15% 13%
35%15%
0%10%20%30%40%50%60%70%80%90%
100%
Nor
thAm
eric
a
Euro
pe
Asia
Aust
rala
sia
Latin
Amer
ica
Mid
dle
East
Afri
ca
Increased
No Change
Decreased
Source: Preqin Fund Manager Survey, November 2017
Prop
ortio
n of
Res
pond
ents
Investor Location
Fig. 10: Fund Manager Views on How Institutional Investor Appetite for Private Equity Has Changed over the Past 12 Months by Investor Location
© Preqin Ltd. 2018 / www.preqin.com6
PREQIN SPECIAL REPORT: PRIVATE EQUITY IN EMERGING MARKETS
INVESTORS Fig. 13: Number of Emerging Markets-Based Investors in Private Equity by Sub-Region
Source: Preqin
Sub-Saharan Africa81
North Africa25
CentralAmerica
31 SouthAmerica
140
Caribbean13
GreaterChina357
Far East177
South Asia98
Central & Eastern Europe
62
Central Asia8
Middle East142
Preqin’s online platform contains detailed information on the
investment preferences and past investments of 1,134 emerging markets-based investors that are actively investing in private equity, which collectively allocate $262bn to the asset class.
INVESTOR UNIVERSESixteen percent of all private equity investors are based in emerging markets. Greater China is home to the largest number (357) of participants within emerging markets, representing 31% of institutions actively investing in the asset class (Fig. 13).
Foundations and endowment plans as well as public and private sector pension funds are more prevalent in developed markets, while corporate investors, banks and investment companies comprise the largest proportion of emerging markets-based investors in private equity (Fig. 14).
INVESTMENT PREFERENCESA larger proportion of institutions in developed markets have a preference for buyout funds compared to their emerging
markets-based counterparts, whereas the reverse is true for investments in venture capital and growth vehicles (Fig. 15). A significantly greater proportion of investors in developed markets utilize funds of funds, perhaps a reflection of the competition for top-tier funds within developed markets and funds of funds being the only route to access these vehicles. Furthermore, fund of funds managers typically offer co-investment and secondary opportunities that can provide higher returns and a more bespoke portfolio.
FUTURE ACTIVITYPreqin interviewed over 250 private equity investors at the end of 2017 to gauge their views on the market and their planned future activity in the asset class. Although the North American and European markets are the main focus for investors, 30% of respondents intend to increase their allocation to emerging markets over 2018, with a further 64% planning to maintain their allocation (Fig. 16).
Within emerging markets, Emerging Asia remains at the forefront of investors’ minds. Over half (51%) of respondents specifically favour China, a 12-percentage-point increase from December 2016 and a suggestion that investors expect to see further growth in the Chinese economy over 2018 (Fig. 17). Sixteen percent of investors believe Central & Eastern Europe presents the best investment opportunities, which may be a reflection of LPs searching for value outside developed markets. By contrast, India was viewed less favourably among investors than in December 2015. The low proportions for Russia and the Middle East may be attributed to ongoing geopolitical risk.
PROPORTION OF INVESTORS THAT FEEL EMERGING MARKETS PRESENT THE BEST
OPPORTUNITIES GLOBALLY
Dec-16 Dec-17
18% 18%
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0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
EmergingMarkets-
Based Investors
DevelopedMarkets-
Based Investors
Other
Endowment Plan
Foundation
Sovereign Wealth Fund
Public Pension Fund
Wealth Manager
Asset Manager
Private Sector Pension Fund
Family Office
Insurance Company
Government Agency
Investment Company
Bank/Investment Bank
Corporate Investor
Source: Preqin
Prop
ortio
n of
Inve
stor
s
Fig. 14: Private Equity Investors by Type
7%
41%
16%
67%
11%5%
70%
4%9%
59%
44% 42%
27%
12%
64%
10%
0%10%20%30%40%50%60%70%80%
Bala
nced
Buyo
ut
Fund
of F
unds
Gro
wth
Seco
ndar
ies
Turn
arou
nd
Vent
ure
Capi
tal
Oth
erPr
ivat
e Eq
uity
Emerging Markets-Based Investors Developed Markets-Based Investors
Source: Preqin
Strategy Preference
Fig. 15: Strategy Preferences of Investors in Private Equity
6% 7% 6% 6%
58% 60% 61% 64%
36% 33% 32% 30%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
NorthAmerica
Europe Asia EmergingMarkets
IncreaseAllocation
MaintainAllocation
DecreaseAllocation
Source: Preqin Investor Interviews, December 2017
Prop
ortio
n of
Res
pond
ents
Investment Location
Fig. 16: Investors’ Intentions for Their Private Equity Allocations over the Next 12 Months by Investment Location
0% 20% 40% 60%
Africa
Middle East
Russia
Central & Eastern Europe
Brazil
India
Latin America
China
Emerging Asia
Dec-15 Dec-16 Dec-17
Source: Preqin Investor Interviews, December 2017
Proportion of Respondents
Fig. 17: Countries and Regions within Emerging Markets that Investors View as Presenting the Best Opportunities, 2015 - 2017
Prop
ortio
n of
Inve
stor
s
Fig. 18: Largest Emerging Markets-Based Investors by Current Allocation to Private Equity
Rank Investor Allocation to PE ($bn) Type Location
1 Kuwait Investment Authority 52.4 Sovereign Wealth Fund Safat, Kuwait
2 China Investment Corporation 22.1 Sovereign Wealth Fund Beijing, China
3 National Pension Service 21.4 Public Pension Fund Jeonju-si, South Korea
4 China Life Insurance 9.9 Insurance Company Beijing, China
5 Export-Import Bank of China 6.6 Bank Beijing, China
Source: Preqin
Fig. 19: Sample Emerging Markets-Based Investors Targeting Private Equity Funds in the Next 12 Months
Investor Location Type Investment Plans for the Next 12 Months
Chang'An International Trust Shaanxi, China Wealth Manager
Plans to commit CNY 1-1.5bn to private equity funds in the next 12 months. The wealth manager is open to all fund types, but maintains a preference for growth and fund of funds vehicles with a global reach, and will invest with a mixture of existing managers in its portfolio and managers it has not previously worked with.
Al Muhaidib & Sons Group Damman, Saudi Arabia
Investment Company
Expects to invest in 4-5 private equity funds in the next 12 months. The Saudi Arabia-based investment company will target buyout and growth vehicles focused on North America and the Middle East, but will consider opportunities in West Europe on a case-by-case basis, investing only with managers it has not previously worked with.
Korea Post Insurance Sejong-si, South Korea
Insurance Company
Will commit KRW 54-108bn ($50-100mn) to up to two private equity funds in the next 12 months. The South Korea-based insurance company will target mid-cap buyout vehicles focused on North America and Europe.
Source: Preqin
© Preqin Ltd. 2018 / www.preqin.com8
PREQIN SPECIAL REPORT: PRIVATE EQUITY IN EMERGING MARKETS
PERFORMANCE
43 75 77 103 153 180 226 279 309 358427
520
5588 103 104
107131
134169 147
153
173
275
0
100
200
300
400
500
600
700
800
900
Dec
-06
Dec
-07
Dec
-08
Dec
-09
Dec
-10
Dec
-11
Dec
-12
Dec
-13
Dec
-14
Dec
-15
Dec
-16
Sep-
17Dry Powder($bn)
UnrealizedValue ($bn)
Source: Preqin
Asse
ts u
nder
Man
agem
ent (
$bn)
Fig. 20: Emerging Markets-Focused Private Equity Assets under Management, 2006 - 2017*
-60-40-20
020406080
100120140
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Q1-
Q3
2017
Capital Called up ($bn) Capital Distributed ($bn) Net Cash Flow ($bn)
Source: Preqin
Fig. 21: Capital Called up and Distributed by Emerging Markets-Focused Private Equity Funds, 2006 - Q3 2017
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Top Quartile NetIRR Boundary
Median Net IRR
Bottom QuartileNet IRR Boundary
Source: Preqin
Net
IRR
sinc
e In
cept
ion
Fig. 22: Emerging Markets-Focused Private Equity Funds: Median Net IRRs and Quartile Boundaries by Vintage Year
Vintage Year
0%
5%
10%
15%
20%
25%
30%
9% 10% 11% 12% 13%
EmergingMarkets Focused
North AmericaFocused
Europe Focused
Source: Preqin
Fig. 23: Private Equity Risk/Return: Emerging Markets- vs. North America- and Europe-Focused Funds (Vintage 2005 onwards)
Return - Median Net IRR
Risk
- St
anda
rd D
evia
tion
of N
et IR
R
Fig. 24: Emerging Markets-Focused Private Equity Funds to Watch (Vintage 2016-2018)
Fund Firm Vintage Fund Size (mn) Type
Emerging Market(s) Targeted
Net Multiple (X)
Date Reported
Bain Capital Asia III Bain Capital 2016 3,000 USD Buyout ASEAN 1.63 Sep-17
East Ventures 5 East Ventures 2016 28 USD Early Stage: Seed Southeast Asia 1.27 Mar-17
CRCM Frontier Technology Fund CRCM Ventures 2016 60 USD** Early Stage China 1.26 Mar-18
AB Value Bridge VI AB Value Capital Partners 2016 100 USD Direct Secondaries Greater China 1.24 Dec-17
PAG Asia Capital Fund II PAG Asia Capital 2016 3,656 USD Buyout Emerging Asia 1.23 Dec-17
Source: Preqin
*Due to Preqin’s additional research efforts to strengthen our alternative assets data in China, AUM figures have increased significantly as we aim to be more reflective of the industry. In Fig. 20, state-backed China-based funds represent $74bn in AUM as at September 2017.**Denotes target size.
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BUYOUT DEALS & EXITS
+17%Growth in the aggregate value of private equity-backed buyout deals in emerging markets from 2016 to 2017.
$214mnAverage value of private equity-backed buyout deals in emerging markets in 2017, 48% higher than 2016 ($145mn).
201Number of private equity-backed buyout exits in emerging markets in 2017, the lowest number since 2009.
541
399
569
712649
578 557
466 489445
105
0
10
20
30
40
50
60
0
100
200
300
400
500
600
700
800
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018YTD
No. of Deals Aggregate Deal Value ($bn)
Source: Preqin
No.
of D
eals
Fig. 25: Private Equity-Backed Buyout Deals in Emerging Markets, 2008 - 2018 YTD (As at April 2018)
Aggregate Deal Value ($bn)
0%10%20%30%40%50%60%70%80%90%
100%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018YTD
Africa Central & Eastern EuropeEmerging Asia Latin AmericaMiddle East (Excl. Israel)
Source: Preqin
Prop
ortio
n of
Dea
ls
Fig. 26: Private Equity-Backed Buyout Deals in Emerging Markets by Sub-Region, 2008 - 2018 YTD (As at April 2018)
0
10
20
30
40
50
60
70
0
50
100
150
200
250
300
350
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018YTD
Sale to GP RestructuringIPO & Follow-on Trade SaleAggregate Exit Value ($bn)
Source: Preqin
No.
of E
xits
Fig. 27: Private Equity-Backed Buyout Exits in Emerging Markets by Type, 2008 - 2018 YTD (As at April 2018)
Fig. 28: Largest Private Equity-Backed Buyout Deals in Emerging Markets, 2016 - 2018 YTD (As at April 2018)
Portfolio Company Investment Type Deal Date Deal Size (mn) Deal Status Investor(s) Location Primary
Industry
Belle International Holdings Limited Public-to-Private Apr-17 53,100 HKD Completed CDH Investments, Hillhouse
Capital Management China Retail
Allegro Group Sp. z oo Buyout Oct-16 3,253 USD Completed Cinven, Mid Europa Partners, Permira Poland Internet
McDonald's Outlets in China and Hong Kong Buyout Jan-17 2,100 USD Completed Carlyle Group, CITIC Capital, CITIC
Group China Restaurants
Woori Bank Co., Ltd Public-to-Private Nov-16 2,400,000 KRW Announced
Eugene Asset Management, Hanwha Life Insurance, IMM
Private Equity, Kiwoom Securities, Korea Investment & Securities,
Mirae Asset Global Investments, Tong Yang Life Insurance
South Korea
Financial Services
Primewaterview Limited Buyout Sep-17 2,000 USD Announced Milost Global, Inc Nigeria Property
Source: Preqin
Aggregate Exit Value ($bn)
© Preqin Ltd. 2018 / www.preqin.com10
PREQIN SPECIAL REPORT: PRIVATE EQUITY IN EMERGING MARKETS
VENTURE CAPITAL DEALS & EXITS
+26%Growth in the aggregate value of venture capital deals in emerging markets from 2016 to 2017.
90%of venture capital deals in emerging markets in 2017 were located in Emerging Asia.
220Number of venture capital-backed exits in emerging markets in 2017, down from 252 in 2016.
699 651995
1,438 1,5011,762
2,606
4,397
5,305
4,274
1,805
0
10
20
30
40
50
60
70
80
90
0
1,000
2,000
3,000
4,000
5,000
6,000
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018YTD
No. of Deals Aggregate Deal Value ($bn)
Source: Preqin
No.
of D
eals
Fig. 29: Venture Capital Deals* in Emerging Markets, 2008 - 2018 YTD (As at April 2018)
Aggregate Deal Value ($bn)
0%10%20%30%40%50%60%70%80%90%
100%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018YTD
Africa Central & Eastern EuropeEmerging Asia Latin AmericaMiddle East
Source: Preqin
Prop
ortio
n of
Dea
ls
Fig. 30: Venture Capital Deals* in Emerging Markets by Sub-Region, 2008 - 2018 YTD (As at April 2018)
Fig. 32: Largest Venture Capital Deals* in Emerging Markets, 2016 - 2018 YTD (As at April 2018)
Portfolio Company Deal Date Stage Deal Size (mn) Investor(s) Location Primary Industry
Didi Chuxing Apr-17 Unspecified Round 5,500 USDBank of Communications, China
Merchants Bank, Pagoda Investment, RCFSI, Silver Lake, SoftBank
China Telecoms
Ant Financial Services Group Apr-16 Series B/Round 2 4,500 USD
CCB Trust Co., Ltd., China Development Bank Capital, China Investment
Corporation, China Life Insurance Company, China Post Capital, Primavera
Capital
China Internet
Didi Chuxing Dec-17 Unspecified Round 4,000 USD Mubadala Capital, SoftBank China Telecoms
Source: Preqin
0
5
10
15
20
25
30
35
40
45
0
50
100
150
200
250
300
350
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018YTD
Africa Central & Eastern EuropeEmerging Asia Latin AmericaMiddle East Aggregate Exit Value ($bn)
Source: Preqin
No.
of E
xits
Fig. 31: Venture Capital Exits in Emerging Markets by Sub-Region, 2008 - 2018 YTD (As at April 2018)
Aggregate Exit Value ($bn)
*Figures exclude add-ons, grants, mergers, secondary stock purchases and venture debt.
11
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AFRICA
Fig. 37: Largest Private Equity-Backed Buyout Deals in Africa, 2016 - 2018 YTD (As at April 2018)
Portfolio Company Deal Date Deal Size (mn) Location
Primewaterview Limited Sep-17 2,000 USD Nigeria
Tenke Fungurume Mining S.A.R.L. Nov-16 1,136 USD
Democratic Republic of
Congo
Royal Dutch Shell's onshore assets in Gabon Mar-17 628 USD Gabon
Consol Glass (Pty) Ltd. Mar-17 6,600 ZAR South Africa
Tsebo Sep-16 5,250 ZAR South Africa
Source: Preqin
21
11
1719 18
28
16 15
19
10
21.2 1.5 1.9 2.10.8
3.01.6
4.52.2
0.7 0.10
5
10
15
20
25
30
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018YTD
No. of Funds Closed Aggregate Capital Raised ($bn)
Source: Preqin
Fig. 33: Annual Africa-Focused Private Equity Fundraising, 2008 - 2018 YTD (As at April 2018)
Year of Final Close
36%45%
30%27%
11%7%
16% 13%
3% 3%3% 4%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Africa-BasedInvestors
Developed Markets-BasedInvestors
$100bn or More
$50-99.9bn
$10-49.9bn
$5-9.9bn
$1-4.9bn
Less than $1bn
Source: Preqin
Fig. 34: Assets under Management of Private Equity Investors (As at April 2018)
Prop
ortio
n of
Inve
stor
s
79
58
46
6169 73
94
82
109
98
25
0
1
2
3
4
5
6
0
20
40
60
80
100
120
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018YTD
No. of Deals Aggregate Deal Value ($bn)
Source: Preqin
No.
of D
eals
Fig. 35: Private Equity-Backed Buyout Deals in Africa, 2008 - 2018 YTD (As at April 2018)
Aggregate Deal Value ($bn) 14
1922
29
4946
41
6865
69
35
0
100
200
300
400
500
600
0
10
20
30
40
50
60
70
80
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018YTD
No. of Deals Aggregate Deal Value ($mn)
Source: Preqin
Fig. 36: Venture Capital Deals* in Africa, 2008 - 2018 YTD (As at April 2018)
No.
of D
eals
Aggregate Deal Value ($m
n)
Fig. 38: Largest Venture Capital Deals* in Africa, 2016 - 2018 YTD (As at April 2018)
Portfolio Company Deal Date Deal Size (mn) Location
Africa Internet Group** Apr-16 375 EUR Nigeria
Takealot Online (Pty) Ltd. Apr-17 960 ZAR South Africa
Off-Grid Electric Tanzania Limited Jan-18 55 USD Tanzania
Travelstart Online Travel Operations Pty LTD. Feb-16 40 USD South Africa
iRoko Partners Limited Jan-16 19 USD Nigeria
Source: Preqin
*Figures exclude add-ons, grants, mergers, secondary stock purchases and venture debt.**€375mn financing round includes a €75mn round announced in February 2016, a €225mn round announced in March 2016 and a €75mn round announced in April 2016.
© Preqin Ltd. 2018 / www.preqin.com12
PREQIN SPECIAL REPORT: PRIVATE EQUITY IN EMERGING MARKETS
CENTRAL & EASTERN EUROPE
Fig. 43: Largest Private Equity-Backed Buyout Deals in Central & Eastern Europe, 2016 - 2018 YTD (As at April 2018)
Portfolio Company Deal Date Deal Size (mn) Location
Allegro Group Sp. z oo Oct-16 3,253 USD Poland
Zabka Polska sp. z o.o. Feb-17 1,100 EUR Poland
PJSC Polyus May-17 700 USD Russia
Profi Rom Food Group Nov-16 533 EUR Romania
Russian Helicopters, JSC Feb-17 300 USD Russia
Source: Preqin
31
21 20
32
28
33
26
2119
22
1
5.73.3
1.7 2.85.5
15.3
4.82.3
12.1
5.3
0
5
10
15
20
25
30
35
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018YTD
No. of Funds Closed Aggregate Capital Raised ($bn)
Source: Preqin
Fig. 39: Annual Central & Eastern Europe-Focused Private Equity Fundraising, 2008 - 2018 YTD (As at April 2018)
Year of Final Close
49% 45%
25% 27%
8% 7%
11% 13%
6% 3%2% 4%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Central & EasternEurope-Based
Investors
Developed Markets-Based Investors
$100bn or More
$50-99.9bn
$10-49.9bn
$5-9.9bn
$1-4.9bn
Less than $1bn
Source: Preqin
Fig. 40: Assets under Management of Private Equity Investors (As at April 2018)
Prop
ortio
n of
Inve
stor
s
122
62
111
129
10093
77 73
86
105
12
0
1
2
3
4
5
6
7
8
9
0
20
40
60
80
100
120
140
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018YTD
No. of Deals Aggregate Deal Value ($bn)
Source: Preqin
No.
of D
eals
Fig. 41: Private Equity-Backed Buyout Deals in Central & Eastern Europe, 2008 - 2018 YTD (As at April 2018)
Aggregate Deal Value ($bn)
52 55
108
142
185206
188
156177
145
42
0
100
200
300
400
500
600
700
0
50
100
150
200
250
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018YTD
No. of Deals Aggregate Deal Value ($mn)
Source: Preqin
Fig. 42: Venture Capital Deals* in Central & Eastern Europe, 2008 - 2018 YTD (As at April 2018)
No.
of D
eals
Aggregate Deal Value ($m
n)
Fig. 44: Largest Venture Capital Deals* in Central & Eastern Europe, 2016 - 2018 YTD (As at April 2018)
Portfolio Company Deal Date Deal Size (mn) Location
Digital Finance International Dec-17 50 USD Russia
AImotive Jan-18 38 USD Hungary
Capital Com SV Investments Limited Jul-17 25 USD Cyprus
Creamfinance LLC Mar-17 21 EUR Poland
Organica Water Inc. Feb-18 21 USD Hungary
Source: Preqin
*Figures exclude add-ons, grants, mergers, secondary stock purchases and venture debt.
13
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EMERGING ASIA
Fig. 49: Largest Private Equity-Backed Buyout Deals in Emerging Asia, 2016 - 2018 YTD (As at April 2018)
Portfolio Company Deal Date Deal Size (mn) Location
Belle International Holdings Limited Apr-17 53,100 HKD China
McDonald's Outlets in China and Hong Kong Jan-17 2,100 USD China
Woori Bank Co., Ltd Nov-16 2,400,000 KRW South Korea
Axis Bank Limited Nov-17 116,260 INR India
HDFC Jan-18 111,040 INR India
Source: Preqin
228 234
359
468
388357
416
617560
316
385123 44 74 53 44
103 80 84 101
7.60
100
200
300
400
500
600
700
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018YTD
No. of Funds Closed Aggregate Capital Raised ($bn)
Source: Preqin
Fig. 45: Annual Emerging Asia-Focused Private Equity Fundraising, 2008 - 2018 YTD (As at April 2018)*
Year of Final Close
27%
45%
26%
27%8%
7%22%
13%8%3%9% 4%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Emerging Asia-BasedInvestors
Developed Markets-BasedInvestors
$100bn or More
$50-99.9bn
$10-49.9bn
$5-9.9bn
$1-4.9bn
Less than $1bn
Source: Preqin
Fig. 46: Assets under Management of Private Equity Investors (As at April 2018)
Prop
ortio
n of
Inve
stor
s
225207
315
404365
327290
226204
150
49
0
5
10
15
20
25
30
35
40
45
0
50
100
150
200
250
300
350
400
450
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018YTD
No. of Deals Aggregate Deal Value ($bn)
Source: Preqin
No.
of D
eals
Fig. 47: Private Equity-Backed Buyout Deals in Emerging Asia, 2008 - 2018 YTD (As at April 2018)
Aggregate Deal Value ($bn)
596 528811
1,163 1,1111,317
2,194
3,983
4,863
3,837
1,648
0
10
20
30
40
50
60
70
80
90
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018YTD
No. of Deals Aggregate Deal Value ($bn)
Source: Preqin
Fig. 48: Venture Capital Deals** in Emerging Asia, 2008 - 2018 YTD (As at April 2018)
No.
of D
eals
Aggregate Deal Value ($bn)
Fig. 50: Largest Venture Capital Deals* in Emerging Asia, 2016 - 2018 YTD (As at April 2018)
Portfolio Company Deal Date Deal Size (mn) Location
Didi Chuxing Apr-17 5,500 USD China
Ant Financial Services Group Apr-16 4,500 USD China
Didi Chuxing Dec-17 4,000 USD China
Meituan-Dianping Sep-17 4,000 USD China
Meituan-Dianping Jan-16 3,300 USD China
Source: Preqin
*Due to Preqin’s additional research efforts to strengthen our alternative assets data in China, fundraising figures have increased significantly as we aim to be more reflective of the industry.**Figures exclude add-ons, grants, mergers, secondary stock purchases and venture debt.
© Preqin Ltd. 2018 / www.preqin.com14
PREQIN SPECIAL REPORT: PRIVATE EQUITY IN EMERGING MARKETS
LATIN AMERICA
Fig. 55: Largest Private Equity-Backed Buyout Deals in Latin America, 2016 - 2018 YTD (As at April 2018)
Portfolio Company Deal Date Deal Size (mn) Location
InterGen's Mexico Assets Dec-17 1,256 USD Mexico
Odebrecht Ambiental S.A. Aug-16 908 USD Brazil
Petrobras Chile Distribuición Ltda May-16 470 USD Chile
Petrolera Entre Lomas S.A. Jan-18 360 USD Argentina
Avant Energy S. de R.L. de C.V. Dec-16 300 USD Mexico
Source: Preqin
25
14
27
36
3229
32 32
19 18
1
5.3
1.1
6.810.5
3.6 3.4
7.8
2.9 3.0 2.60.2
0
5
10
15
20
25
30
35
40
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018YTD
No. of Funds Closed Aggregate Capital Raised ($bn)
Source: Preqin
Fig. 51: Annual Latin America-Focused Private Equity Fundraising, 2008 - 2018 YTD (As at April 2018)
Year of Final Close
44% 45%
23% 27%
13% 7%
16% 13%
1%3%
2% 4%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Latin America-BasedInvestors
Developed Markets-Based Investors
$100bn or More
$50-99.9bn
$10-49.9bn
$5-9.9bn
$1-4.9bn
Less than $1bn
Source: Preqin
Fig. 52: Assets under Management of Private Equity Investors (As at April 2018)
Prop
ortio
n of
Inve
stor
s
86
56
77
9690
6570 71
7886
18
0
1
2
3
4
5
6
7
8
9
0
20
40
60
80
100
120
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018YTD
No. of Deals Aggregate Deal Value ($bn)
Source: Preqin
No.
of D
eals
Fig. 53: Private Equity-Backed Buyout Deals in Latin America, 2008 - 2018 YTD (As at April 2018)
Aggregate Deal Value ($bn) 28
38 42
87
120
163156 155
168177
62
0
100
200
300
400
500
600
700
800
900
1,000
0
20
40
60
80
100
120
140
160
180
200
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018YTD
No. of Deals Aggregate Deal Value ($mn)
Source: Preqin
Fig. 54: Venture Capital Deals* in Latin America, 2008 - 2018 YTD (As at April 2018)
No.
of D
eals
Aggregate Deal Value ($m
n)
Fig. 56: Largest Venture Capital Deals* in Latin America, 2016 - 2018 YTD (As at April 2018)
Portfolio Company Deal Date Deal Size (mn) Location
99Taxis Jan-18 300 USD Brazil
Nubank Brasil Mar-18 150 USD Brazil
Rappi, Inc. Jan-18 129 USD Colombia
99Taxis Jan-17 100 USD Brazil
99Taxis May-17 100 USD Brazil
Source: Preqin
*Figures exclude add-ons, grants, mergers, secondary stock purchases and venture debt.
15
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MIDDLE EAST
Fig. 61: Largest Private Equity-Backed Buyout Deals in the Middle East, 2016 - 2018 YTD (As at April 2018)
Portfolio Company Deal Date Deal Size (mn) Location
Al Borg Medical Laboratories Jun-16 270 USD Saudi Arabia
Middlesex University Dubai Jan-17 75 USD United Arab Emirates
Diamond Meat Processing LLC Apr-16 17 USD United Arab
Emirates
AMI Middle East LLC Aug-17 7 USD United Arab Emirates
Source: Preqin
13
8
6
109
7
5
98
6
3.0
1.40.8 1.0
2.9
0.21.3
0.3 0.6 0.10
2
4
6
8
10
12
14
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018YTD
No. of Funds Closed Aggregate Capital Raised ($bn)
Source: Preqin
Fig. 57: Annual Middle East-Focused Private Equity Fundraising, 2008 - 2018 YTD (As at April 2018)
Year of Final Close
26%
45%
26%
27%7%
7%26%
13%4%3%11%4%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Middle East-Based Investors
Developed Markets-Based Investors
$100bn or More
$50-99.9bn
$10-49.9bn
$5-9.9bn
$1-4.9bn
Less than $1bn
Source: Preqin
Fig. 58: Assets under Management of Private Equity Investors (As at April 2018)
Prop
ortio
n of
Inve
stor
s
911 12
17
36
3027
3531
45
18
0
100
200
300
400
500
600
700
800
0
5
10
15
20
25
30
35
40
45
50
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018YTD
No. of Deals Aggregate Deal Value ($mn)
Source: Preqin
Fig. 60: Venture Capital Deals** in the Middle East, 2008 - 2018 YTD (As at April 2018)
No.
of D
eals
Aggregate Deal Value ($m
n)
Fig. 62: Largest Venture Capital Deals** in the Middle East, 2016 - 2018 YTD (As at April 2018)
Portfolio Company Deal Date Deal Size (mn) Location
Careem Inc. Dec-16 350 USD United Arab Emirates
Souq.com FZ-LLC Feb-16 275 USD United Arab Emirates
Careem Inc. Jun-17 150 USD United Arab Emirates
Wadi.com Feb-16 67 USD United Arab Emirates
MSPharma May-17 45 USD Jordan
Source: Preqin
*Deal size not disclosed.**Figures exclude add-ons, grants, mergers, secondary stock purchases and venture debt.
29
16
2022
25
20
26
1412
6
10
200
400
600
800
1,000
1,200
1,400
1,600
1,800
0
5
10
15
20
25
30
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018YTD
No. of Deals Aggregate Deal Value ($mn)
Source: Preqin
No.
of D
eals
Fig. 59: Private Equity-Backed Buyout Deals in the Middle East, 2008 - 2018 YTD (As at April 2018)
Aggregate Deal Value ($m
n)
*
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PREQIN SPECIAL REPORT:PRIVATE EQUITY IN EMERGING MARKETS
MAY 2018
PREQIN
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