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Emerging markets buyout funds on course for record

Reuters – Investors continued to pour money into emerging markets private equity between January and April, raising $25 billion (13 billion pounds) and on course to top last year’s total despite a downturn in developed markets, a report revealed.

The present level of fundraising suggests a total of $75 billion for 2008. That compares with $59 billion in the whole of 2007, the Washington DC-based Emerging Markets Private Equity Association (EMPEA) said in a report released late on Tuesday.

Although a sizeable increase, it would be a slowdown from the doubling of funds seen between 2006 and 2007.

"Recent record-breaking fundraising is further evidence that investors see long-term potential for strong returns in emerging markets," said EMPEA President Sarah Alexander in a statement.

"(Investors) recognise private equity markets in developing countries are maturing, and the turmoil in developed markets should have limited impact."

While a reluctance of major banks to lend money has stifled Western buyouts, deals in emerging markets rely on cash or local banks less exposed to the global credit crunch.

The report said emerging market private equity funds were expected to deliver an average premium of 6.7 percent relative to U.S. counterparts, despite broadly similar management fees — 1.95 percent for emerging funds and 1.8 percent for those focused on North America and Europe.

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