Emerging markets will stay lucrative for PEs: Study

The appetite of private equity (PE) investors for emerging markets is likely to continue in the next 12 months, but they are less bullish about India than they were a year ago, says a survey.

According to a study by research firm Preqin, just 12 per cent of PE investors surveyed named India as presenting attractive opportunities, a much lower proportion than in the December 2010 study, when India was named by 35 per cent investors.

Asia, however, remains a hot favourite market for PE investors, with 60 per cent investors considering the former as “attractive”, followed by North America, which is favoured by 42 per cent respondents.

Besides, within the emerging market, Asia remains the most-cited region, named by 43 per cent of investors, the survey says, adding that 33 per cent specifically named China as presenting attractive opportunities.

Emerging markets continue to attract strong interest from investors. Seventy-six per cent of investors will consider investing in emerging markets, an increase of six percentage points from December 2010, when 70 per cent of investors were open to investing in emerging markets, the survey says.

According to the study, 99 per cent investors who invest in emerging markets expect to maintain or increase their allocation to emerging markets over the next 12 months.

However, according to a separate survey by consultancy firm Grant Thornton India, domestic companies are favouring the PE route to raise funds as the country's initial public offerings market has been ‘almost dead’ for over a year now.

In 2011, as many as 373 deals were closed in the country with an overall deal value of $8.75 billion, against 253 deals worth $6.23 billion in 2010.