Research

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Fundraising highlights from EMPEA’s Year-End 2017 Industry Statistics:

• The composition of fundraising by strategy has shifted as venture capital, infrastructure and private credit continue to gain ground. In line with long-developing trends, the growth equity share of capital raised by EM funds was just 25% over the most recent two-year period (2016-2017), compared to 41% in 2008-2009 and 51% in 2010-2011.
• Venture capital funds led an upturn in fundraising for first-time teams in 2017, especially in MENA, China and India. Six MENA-focused, first-time funds held closes in 2017, the highest number of new entrants to the region since 2010. Debut funds raised for the region included Five Capital Fund I and Ezdehar Egypt Mid-Cap Fund. Three of the first-time funds that raised capital for MENA in 2017 employ a VC strategy, a sign that new teams with a specific focus on tech-enabled entrepreneurship and innovation continue to find backers.
• Both experienced and new teams are tapping into LP interest in renewable power and other infrastructure opportunities. Infrastructure fundraising reached US$8.1 billion in 2017 as managers continue to raise capital at scale to address the infrastructure gap in emerging markets. Just under 49% of infrastructure funds raised accrued to funds specifically targeting renewable power. The largest funds raised included Macquarie Asia Infrastructure Fund II (reported commitments of approximately US$3 billion), Actis Energy 4 (US$2.75 billion) and A.P. Moller Capital’s Africa Infrastructure Fund I (US$650 million), a debut vehicle investing in assets that will support the African continent’s continued sustainable development.
• Private credit fundraising surpassed all previous years on record in 2017. GPs raised US$7.3 billion for EM private credit funds, beating the previous high of US$6.6 billion raised in 2015 and illustrating growing investor interest in credit-oriented strategies.

Investment highlights from EMPEA’s 2017 Year-End Industry Statistics:

• Consumer services led all other sectors for investment in 2017 at US$17.9 billion in disclosed capital invested, nearly triple the 2008 total. The two largest investments recorded in 2017—Hillhouse Capital Management and CDH Investments’ US$2.2 billion buyout of Belle International (China) and Mid Europa Partners, Cinven and Permira’s US$2 billion1 acquisition of Allegro (Poland)—were both in the e-commerce segment. Over the last decade, capital deployed in consumer services (inclusive of retail, media and travel) has risen at a faster rate than in any other industry category, surpassing both utilities (including power) and health care.
• Large transactions have accounted for a higher share of disclosed capital invested in growth and buyout deals in recent years. The share of middle-market investments in the US$25 million to US$100 million range, declined to 14% of disclosed capital invested in 2017, compared to one-third of all capital deployed in 2012.

Exit highlights from EMPEA’s 2017 Year-End Industry Statistics:

• In 2017, publicly disclosed exits via the public market route increased 29%, year-on-year, whereas strategic sales and secondary sales both declined by 29% and 21%, respectively. However, higher levels of global equity market volatility in 2018 may have an impact on fund managers’ plans going forward.
• Latin America and CEE & CIS stand out amid the public market exits revival of 2017. Fund managers completed public market exits for 14 Latin America-based companies, including 11 IPOs. Fund managers in Central & Eastern Europe followed suit, with 5 private capital-backed IPOs across exchanges in the United Kingdom, Poland, Hungary and Turkey.