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Emerging markets prove fruitful for private equity

By   /   February 24, 2014  /   No Comments

Global private equity firms take interest in emerging markets

Private equity firms have been hard at work generating funds for emerging markets in 2014. Developing economies are now seen as favourable alternatives to already established markets, given their potential for long-term growth and currently low prices for private equity opportunities.

Outflow from the emerging market stocks and funds has seen a surge in the last eight weeks, with approximately $21 billion being taken. The whole of 2-13 saw a $15.2 billion outflow, making this current surge quite significant.

However, private equity’s fundraising has seen an increase, with 32 percent rise on last year’s figures. The news comes from data found at Palico, a private equity marketplace. This 32% raise has produced over $6.5 billion for emerging markets.

Private equity funds for the emerging market have nearly doubled in the past few months, with fundraising at a 17 percent high.

Private equity can often be categorised as taking interest in short-term options, with the fluid aspect of the funds giving investors leeway in making money. However, as the post economic crisis world develops, the developing world is becoming a more secure option. The slow progress in first world markets have spurred private equity managers to become resourceful, and it seems emerging markets are the answer.

Developed economies have a growth rate of approximately 2.5 percent, whilst emerging economies have a growth rate at double this figure. This long-term annual growth is a big draw for private equity investment managers, and large companies such as Blackstone are following this new trend.

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