PE investment likely to rise in emerging markets: report

Private equity investment is likely to increase in emerging markets like India which have turned out as favourite destinations for investors post the global financial meltdown, says a report.
     
According to the report by private equity firm Coller Capital and the Emerging Markets Private Equity Association (EMPEA), about 57 per cent of investors surveyed plan to accelerate their new commitments in the countries, including China, India and Brazil, over the next two years.
     
"Investors are clearly drawn to markets with strong underlying growth rates, which trumps leverage in driving returns," EMPEA President and CEO Sarah Alexander said.
     
The proportion investors' total private equity commitments to emerging markets would double to 11-15 per cent from 6-10 per cent in two years time.
     
Besides, more than three-quarters of 151 investors polled worldwide expect annual net returns greater than 16 per cent from their emerging market portfolio, compared with 29 per cent projecting similar returns from their global portfolio.
     
"Investors are still increasing the proportion of their private equity commitments targeted at emerging markets ... because LPs (Limited Partners) expect emerging market funds to outperform developed market ones," Alexander added.
     
Apart from China, Brazil and India, investors are also looking at less penetrated Asian markets like Vietnam, Indonesia and Thailand for investment.
     
"Beyond China, Brazil and India, which continue to dominate the rankings in terms of investment attractiveness, Emerging Asian markets (Vietnam, Indonesia and Thailand) are poised to see the greatest expansion in commitments from current investors," the report said.
     
Alexander noted, "Sophisticated investors who have built their exposure in China and India are now looking for the next frontier and see great investment opportunities in less penetrated markets."
     
As per EMPEA data, 196 private equity firms focused on emerging markets raised $22.6 billion in 2009.