PREQIN SPECIAL REPORT: PRIVATE EQUITY IN EMERGING … · placed in the context of the rapid expansion of private equity in emerging markets; since the end of 2005, assets held for

PREQIN SPECIAL REPORT:PRIVATE EQUITY IN EMERGING MARKETS

JULY 2017

alternative assets. intelligent data.

© Preqin Ltd. 2017 / www.preqin.com2

PREQIN SPECIAL REPORT: PRIVATE EQUITY IN EMERGING MARKETS

FOREWORD

When Preqin profiled private equity* in emerging markets** in June 2016, macroeconomic and geopolitical uncertainty had only just begun to impact the industry in these regions. On the private equity side, fundraising and buyout deal activity had

been slowing; however, significant sums of capital were still being secured and invested. Contrastingly, the venture capital sector was flourishing, with record deal flow recorded despite decreasing fundraising levels.

As we reach the halfway mark in 2017, many of these trends have persisted: full-year 2016 fundraising failed to surpass 2015; aggregate buyout deal value fell 39% in 2016; and the value of venture capital financings reached new heights. However, these figures must be placed in the context of the rapid expansion of private equity in emerging markets; since the end of 2005, assets held for emerging markets-focused investment have grown nearly 9x to total $564bn as at Q3 2016.

Uncertainty has not been conducive to improving investor sentiment. China has still not shaken off economic growth concerns, and faces fresh challenges over the rising national debt. Brazil is currently in recession and political upheaval following the impeachment of former president Dilma Rousseff, while Russia still faces financial and geopolitical challenges. However, investors remain committed as they recognize the opportunities arising from the long-term changes occurring in many emerging economies, including a rising middle class and an increasingly young workforce. As such, a fifth of investors surveyed at the end of 2016 intended to increase their allocation to emerging markets over 2017, while a further 75% planned to maintain their level of investment.

Crucially, though, emerging markets-focused investment has demonstrated an ability to deliver attractive returns for investors: median net IRRs are only slightly below those seen for North America- and Europe-focused vehicles, reaching 10% for post-crisis vintages, while top-quartile vehicles are pushing 20% for the same period. Positively for institutions, 2015 was the first year in which emerging markets-focused funds have distributed more capital back to investors than was called up, and net cash flow for the first three quarters of 2016 (the latest data available) has already surpassed this total.

This report provides a detailed look at the private equity environment in emerging markets, including fundraising, institutional investors, deals and performance, supplementing the information on Preqin’s Private Equity Online service. For more information, please visit www.preqin.com or contact [email protected].

All rights reserved. The entire contents of Preqin Special Report: Private Equity in Emerging Markets, July 2017 are the Copyright of Preqin Ltd. No part of this publication or any information contained in it may be copied, transmitted by any electronic means, or stored in any electronic or other data storage medium, or printed or published in any document, report or publication, without the express prior written approval of Preqin Ltd. The information presented in Preqin Special Report: Private Equity in Emerging Markets, July 2017 is for information purposes only and does not constitute and should not be construed as a solicitation or other offer, or recommendation to acquire or dispose of any investment or to engage in any other transaction, or as advice of any nature whatsoever. If the reader seeks advice rather than information then he should seek an independent financial advisor and hereby agrees that he will not hold Preqin Ltd. responsible in law or equity for any decisions of whatever nature the reader makes or refrains from making following its use of Preqin Special Report: Private Equity in Emerging Markets, July 2017. While reasonable efforts have been made to obtain information from sources that are believed to be accurate, and to confirm the accuracy of such information wherever possible, Preqin Ltd. does not make any representation or warranty that the information or opinions contained in Preqin Special Report: Private Equity in Emerging Markets, July 2017 are accurate, reliable, up-to-date or complete. Although every reasonable effort has been made to ensure the accuracy of this publication Preqin Ltd. does not accept any responsibility for any errors or omissions within Preqin Special Report: Private Equity in Emerging Markets, July 2017 or for any expense or other loss alleged to have arisen in any way with a reader’s use of this publication.

p3 Fundraising

p5 Fund Managers

p6 Investors

p8 Performance

p9 Buyout Deals & Exits

p10 Venture Capital Deals & Exits

p11 Africa

p12 Central & Eastern Europe

p13 Emerging Asia

p14 Latin America

p15 Middle East

DEFINITIONS

*’Private equity’ – includes buyout, venture capital, growth, turnaround, balanced, co-investment, co-investment multi-manager, direct secondaries, private equity secondaries and private equity funds of funds. It excludes private debt, real estate, infrastructure and natural resources.

**‘Emerging markets’ – includes all countries in Africa, Asia (excluding Hong Kong, Japan and Singapore), Central & Eastern Europe, Latin America (South and Central America, the Caribbean) and the Middle East (excluding Israel). For a full list of countries included in this report please contact [email protected].


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FUNDRAISING

Private equity fundraising focused on emerging markets has slowed

over recent years, both in terms of the proportion of total fundraising it represents (Fig. 1) and the total number of funds raised and capital secured (Fig. 2). Since 2011, when emerging markets-focused fundraising reached its zenith – representing 51% of all private equity funds closed and 40% of capital raised globally – its share of both the total number and value have fallen steadily. In 2016, 187 emerging markets-focused funds held a final close, raising $45bn, representing just a fifth of all funds closed and 12% of capital raised – the lowest

annual total in the period examined. While 2017 so far has seen just 61 emerging markets-focused funds close, securing $16bn, this represents 21% of all private equity funds closed so far this year.

REGIONS AND FUND TYPES TARGETEDEmerging Asia has dominated the emerging markets-focused private equity landscape (Fig. 3), representing 77% of aggregate capital raised by such funds since 2008. While Emerging Asia’s share of total capital raised has increased in recent years from 73% of capital raised in 2013 to a record 85% in 2017, the value has declined by 40% since 2014, potentially

a result of the uncertainty generated from China’s revised growth prospects and commodity price declines that have affected the country in recent years. Fundraising figures for the remaining sub-regions include:

■ Latin America: Second only to Emerging Asia in prominence, although the region represents just 8% of capital raised since 2008 and 4% in 2016.

■ Africa: Capital raised reached record levels in 2015 ($4.6bn), before declining to $1.7bn in 2016.

■ Central & Eastern Europe: Geopolitical situation dampened

320291

368

482

399354

330289

187

617532

5487

68 5579

60 4516

0

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300

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400

450

500

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017YTD

No. of Funds Closed Aggregate Capital Raised ($bn)

Source: Preqin Private Equity Online

Year of Final Close

Fig. 2: Emerging Markets-Focused Private Equity Fundraising, 2008 - 2017 YTD (As at May 2017)

1,511

128

842

188

310

174

191 3511 1

216 44

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

No. of Funds Closed Aggregate CapitalRaised ($bn)

Other Private Equity

Secondaries

Fund of Funds

Buyout

Growth

Venture Capital


Prop

ortio

n of

Tota

l

Fig. 4: Emerging Markets-Focused Private Equity Fundraising by Fund Type, 2008 - 2017 YTD (As at May 2017)

31%

38%

44%

51%

42%

35%30% 29%

20% 21%18%15%

31%

40%

29%

18%22%

18%

12% 10%

0%

10%

20%

30%

40%

50%

60%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017YTD

No. of Funds Closed Aggregate Capital Raised


Prop

ortio

n of

Tota

l

Year of Final Close

Fig. 1: Emerging Markets-Focused Fundraising as a Proportion of All Private Equity Fundraising, 2008 - 2017 YTD (As at May 2017)

0

10

20

30

40

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70

80

90

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017YTD

Africa Central & Eastern EuropeEmerging Asia Latin AmericaMiddle East Diversified Emerging Markets


Aggr

egat

e Ca

pita

l Rai

sed

($bn

)

Year of Final Close

Fig. 3: Emerging Markets-Focused Private Equity Fundraising by Geographic Focus, 2008 - 2017 YTD (As at May 2017)



investor enthusiasm, with fundraising falling from $5.6bn in 2013 to $1.3bn in 2016.

■ Middle East: Similar to Central & Eastern Europe, concerns surrounding stability have seen fundraising fall from $2.9bn raised in 2012 to just $0.2bn in 2016.

■ Diversified: Funds with no specific mandate have represented just 5% of emerging markets-focused capital raised since 2008.

Venture capital funds represent the largest number (1,511) of emerging markets-focused vehicles closed since 2008, although the 842 growth funds closed have raised the most capital: growth funds have secured $188bn in the period compared with $128bn raised by venture capital funds (Fig. 4).

Furthermore, illustrative of the development of some markets, there has been a shift in emerging markets-focused fundraising over the last decade. From 2008 to 2012, growth funds raised the most capital ($117bn), followed by buyout ($78bn) and venture capital ($73bn) funds; however, since 2013, buyout funds have secured nearly 40% ($96bn) of capital raised, while growth and venture capital funds have secured significantly less ($71bn and $55bn respectively).

TIME ON THE ROADAmong all private equity funds closed since 2008, emerging markets-focused funds have generally spent more time on the road: a fifth of developed markets-

focused vehicles reached a final close in less than six months, compared with 15% of emerging markets-focused funds. This is more pronounced for funds currently raising capital: 59% of developed markets-focused funds in market have spent less than a year and a half seeking capital compared with 48% of emerging markets-focused funds.

GP LOCATIONManagers based in emerging markets have raised the majority (75%) of emerging markets-focused funds closed since 2008, although developed markets-based GPs have been increasing their share annually: the proportion of emerging markets-focused funds closed by GPs based outside an emerging market rose for five consecutive years from 16% in 2011 to 34% in 2016 (Fig. 5).

OUTLOOKThere are 582 emerging markets-focused private equity funds in market as at May 2017, seeking an aggregate $206bn from institutional investors (Fig. 6). As with funds closed historically, Emerging Asia is the predominant geographic focus for emerging markets funds in market, as sought by eight of the 10 largest funds. Conversely, the recession in Brazil – Latin America’s largest economy – appears to have affected GPs’ appetite for Latin American investment. The 61 Latin America-focused funds in market are seeking $5.5bn, representing just 3% of capital targeting emerging markets.

74% 75% 81% 84% 80%73% 72% 71% 66% 72%

26% 25% 19% 16% 20%27% 28% 29% 34% 28%

0%

10%

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70%

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90%

100%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017YTD

Emerging Markets Based Developed Markets BasedSource: Preqin Private Equity Online

Prop

ortio

n of

Fun

ds C

lose

d

Year of Final Close

Fig. 5: Emerging Markets-Focused Private Equity Fundraising by Firm Location, 2008 - 2017 YTD (As at May 2017)

0%10%20%30%40%50%60%70%80%90%

100%

EmergingMarketsFocused

DevelopedMarketsFocused

EmergingMarketsFocused

DevelopedMarketsFocused

No. of Funds Raising Aggregate CapitalTargeted ($bn)

Other PrivateEquitySecondaries

Fund of Funds

Buyout

Growth

VentureCapital


Prop

ortio

n of

Tota

l

Fig. 7: Emerging Markets- vs. Developed Markets-Focused Private Equity Funds in Market by Type (As at May 2017)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

No. of Funds Raising Aggregate CapitalTargeted ($bn)

DiversifiedEmerging Markets

Middle East

Latin America

Emerging Asia

Central & EasternEurope

Africa


Prop

ortio

n of

Tota

l

Fig. 6: Emerging Markets-Focused Private Equity Funds in Market by Geographic Focus (As at May 2017)


5


FUND MANAGERS

Fig. 8: Number of Emerging Markets-Based Private Equity Fund Managers by Sub-Region

7% 10% 4% 7% 11% 11% 10%

54% 52%

43%

72% 70% 69%81%

39% 38%53%

22% 19% 20%9%

0%10%20%30%40%50%60%70%80%90%

100%

Nor

th A

mer

ica

Euro

pe

Asi

a

Aus

tral

asia

Latin

Am

eric

a

MEN

A

Sub-

Saha

ran

Afr

ica

Increased

No Change

Decreased

Source: Preqin Fund Manager Survey, November 2016

Prop

ortio

n of

Res

pond

ents

Investor Location

Fig. 10: Fund Manager Views on How Institutional Investor Appetite for Private Equity Has Changed over the Past 12 Months by Investor Location

53%41%

31%

35%

8%13%

5% 6%4% 5%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Emerging Markets Developed Markets

9 Funds or More

6-8 Funds RaisedPreviously



First-Time FundManager


Prop

ortio

n of

Fun

d M

anag

ers

Firm Headquarters

Fig. 9: Private Equity Fund Manager Experience by Firm Headquarters

Fig. 11: Five Largest Emerging Markets-Based Fund Managers by Aggregate Capital Raised for Private Equity Funds in the Last 10 Years*

Firm HeadquartersTotal Capital Raised for Private Equity Funds in

Last 10 Years ($bn)*

China Reform Fund Management Beijing, China 20.2

Hony Capital Beijing, China 10.4

Inventis Investment Holdings (China) Shanghai, China 9.2

CDH Investments Beijing, China 9.1

MBK Partners Seoul, South Korea 8.4


*Includes capital raised by funds that have held at least one interim close.


Sub-Saharan Africa233

North Africa64

CentralAmerica

76 SouthAmerica

215

Caribbean17

GreaterChina883

Far East278

South Asia335

Central & Eastern Europe

370

Central Asia12

Middle East170

Fig. 12: Consistent Performing Emerging Markets-Based Private Equity Fund Managers

Firm Headquarters Average Quartile Rank

DGF Investimentos São Paulo, Brazil 1.00

Trustbridge Partners Shanghai, China 1.20

AJU IB Investment Seoul, South Korea 1.33

Ethos Johannesburg, South Africa

1.40

Enfoca Inversiones Lima, Peru 1.60




Preqin’s Private Equity Online contains detailed information on the investment

preferences and past investments of 883 emerging markets-based investors that are active in the private equity asset class, which collectively manage more than $25tn in assets from 71 individual countries around the world.

INVESTOR UNIVERSEFourteen percent of the global investor population is based in an emerging market. The greatest concentration can be found in Emerging Asia and, in particular, Greater China, which is the largest single contributor to the total – 244 institutions based in the region are actively investing in the asset class (Fig. 13).

Understanding the differences between investors in emerging and developed markets can help those fund managers that are seeking to raise capital. Foundations and endowment plans (categorized under ‘Other’ in Fig. 14) as well as pension funds (both public and private sector) are the dominant investors in developed markets; however, in emerging markets, the most prevalent LPs are banks, corporate investors and investment companies.

INVESTMENT PREFERENCESFurthermore, buyout funds are more attractive investments for institutions in developed markets than those in emerging markets, whereas a greater proportion of emerging markets-based investors have a preference for venture capital vehicles than investors in the rest of the world (Fig. 15). Funds of funds are utilized by a significantly larger proportion of investors in developed markets.

OUTLOOKPreqin surveyed over 200 private equity investors at the end of 2016 to determine their views on the private equity market and future activity in the asset class. Institutions are still favouring opportunities in developed markets over

emerging markets: 61% and 42% stated that North America and Europe were presenting the best opportunities in the market, compared with 21% for emerging markets (Fig. 17).

Within emerging markets, Emerging Asia was at the forefront of investors’ minds, with China and India specifically mentioned as presenting the best opportunities (Fig. 18). Conversely, regions that have been beset by significant geopolitical risk (Middle East, Central

& Eastern Europe and Russia) as well as economic instability (Brazil) were cited by the smallest proportions of investors as presenting the best opportunities.

INVESTORS

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Emerging Markets Based Developed Markets Based

Other

Sovereign Wealth Fund

Wealth Manager

Public Pension Fund

Asset Manager

Fund of Funds Manager

Family Office

Private Sector Pension Fund

Government Agency

Insurance Company

Investment Company

Corporate Investor

Bank/Investment Bank


Prop

ortio

n of

Inve

stor

s

Fig. 14: Private Equity Investors by Type: Emerging Markets- vs. Developed Markets-Based Investors

Fig. 13: Number of Emerging Markets-Based Investors in Private Equity by Sub-Region

Sub-Saharan Africa75

North Africa29

CentralAmerica

23 SouthAmerica

82

Caribbean15

GreaterChina244

Far East131

South Asia73


58

Central Asia6

Middle East147



7


7% 4% 5% 5%

68%65%

77% 75%

25% 31%18% 20%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

NorthAmerica

Europe Asia EmergingMarkets

Increase Allocation

Maintain Allocation

Decrease Allocation

Source: Preqin Investor Interviews, December 2016

Prop

ortio

n of

Res

pond

ents

Fig. 16: Investors’ Plans for their Private Equity Allocations over the Next 12 Months by Location

7%

46%

16%

45%

12%5%

70%

5%9%

60%

45%42%

28%

13%

66%

11%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Bala

nced

Buyo

ut

Fund

of

Fund

s

Gro

wth

Seco

ndar

ies

Turn

arou

nd

Vent

ure

Capi

tal

Oth

er P

rivat

eEq

uity

Emerging Markets Based Developed Markets Based


Prop

ortio

n of

Inve

stor

s

Strategy Preference

Fig. 15: Strategy Preferences of Emerging Markets- vs. Developed Markets-Based Investors in Private Equity

2%

9%

11%

11%

17%

17%

20%

39%

41%

0% 10% 20% 30% 40% 50%

Russia


Brazil

Middle East

Latin America

Africa

India

China

Emerging Asia

Source: Preqin Investor Interviews, December 2016Proportion of Respondents

Fig. 18: Countries and Regions* within Emerging Markets that Investors View as Presenting the Best Opportunities

21%

7%

18%

42%

61%

0% 20% 40% 60% 80%

Emerging Markets

Rest of World

Asia

Europe

North America

Source: Preqin Investor Interviews, December 2016Proportion of Respondents

Fig. 17: Regions* and Markets that Investors View as Presenting the Best Opportunities

Fig. 19: Sample Emerging Markets-Based Investors in Recently Closed Private Equity Funds

Investor Location Type Fund Fund Type Geographic Focus

Sanabil al-Saudia Saudi Arabia Sovereign Wealth Fund Softbank Vision Fund Hybrid Global

Caisse Nationale de Prévoyance Sociale (CNPS) Cameroon Public Pension Fund French-African Investment Fund Growth Africa, France

Shanghai New Culture Media Group China Corporate Investor

Sailing New Culture Private Equity Fund

Buyout Global


Fig. 20: Sample Emerging Markets-Based Investors Targeting Private Equity Funds in the Next 12 Months

Investor Location Type Investment Plans for the Next 12 Months

Malaysia Venture Capital Management

Kuala Lumpur, Malaysia

Government Agency

Plans to commit MYR 1.7-2.6bn across two funds, with a preference for ASEAN-focused venture capital vehicles targeting technology-related industries, although it will also consider opportunities in Japan, Korea and Taiwan.

State Oil Fund of the Republic of Azerbaijan Baku, Azerbaijan

Sovereign Wealth Fund

Plans to invest in two or three buyout funds to gain exposure to Europe and North America.

Transnet Retirement Fund Johannesburg, South Africa

Private Sector Pension Fund

Will invest up to ZAR 1bn in three or four Africa-based early stage venture capital, growth or buyout funds.


*Respondents were not prompted to give their opinions on each region/market individually but to name those they felt best fit these categories; therefore, the results display the regions/markets at the forefront of investors’ minds at the time of the survey.



PERFORMANCE

-40

-20

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Q1-

Q3

2016

Capital Called-up ($bn) Capital Distributed ($bn) Net Cash Flow ($bn)


Fig. 22: Capital Called up and Distributed by Emerging Markets-Focused Private Equity Funds, 2005 - Q3 2016

27 41 70 73 98148 174

221274 306

350390

3652

86 102103

106130

129

163142

152

173

0

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Sep-

16

Dry Powder($bn)

UnrealizedValue ($bn)


Ass

ets

unde

r Man

agem

ent (

$bn)

Fig. 21: Emerging Markets-Focused Private Equity Assets under Management, 2005 - 2016

8%

9%

10%

11%

12%

13%

14%

15%

16%

17%

6% 8% 10% 12%

Emerging MarketsFocused

North AmericaFocused

Europe Focused


Risk

- St

anda

rd D

evia

tion

of N

et IR

R

Return - Median Net IRR

Fig. 24: Private Equity Risk/Return: Emerging Markets- vs. North America- and Europe-Focused Funds (Vintage 2005 onwards)

0%

5%

10%

15%

20%

25%

2005

2006

2007

2008

2009

2010

2011

2012

2013

Top Quartile NetIRR Boundary

Median Net IRR

Bottom QuartileNet IRR Boundary


Net

IRR

sinc

e In

cept

ion

Vintage Year

Fig. 23: Emerging Markets-Focused Private Equity Funds: Median Net IRRs and Quartile Boundaries by Vintage Year

Fig. 25: Emerging Markets-Focused Private Equity Funds to Watch (Vintage 2015-2017)

Fund Firm Vintage Fund Size (mn) Type Emerging Markets

TargetedNet

Multiple (X)Date

Reported

NSI Ventures Northstar Group 2015 80 USDEarly Stage:

Start-upASEAN, Far East 1.84 Sep-16

Ventech China III Ventech China 2015 225 USD Early Stage Greater China 1.60 Jun-16

Hillhouse Fund II Hillhouse Capital Management

2015 2,000 USD Growth China 1.29 Sep-16

East Ventures 5 East Ventures 2016 28 USD Early Stage: Seed Emerging Asia 1.27 Mar-17

Softbank China Venture Capital Fund V

Softbank China Venture Capital

2015 500 USD Venture Capital Greater China 1.09 Jun-16



9


BUYOUT DEALS & EXITS

-39%Decline in aggregate buyout deal value from 2015 to 2016, despite 18 more buyout deals occurring in emerging markets.

111African buyout deals completed in 2016, a new record for the region, representing nearly a quarter of buyout deals in emerging markets.

227private equity-backed buyout exits took place in emerging markets in 2016, the lowest number since 2010, while aggregate exit value fell 47% from 2015.

0%10%20%30%40%50%60%70%80%90%

100%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017YTD

Africa Central & Eastern EuropeEmerging Asia Latin AmericaMiddle East


Prop

ortio

n of

Dea

ls

Fig. 27: Private Equity-Backed Buyout Deals in Emerging Markets by Sub-Region, 2008 - 2017 YTD (As at May 2017)

534

396

567

699645

580552

461 479

157

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2008 2009 2010 2011 2012 2013 2014 2015 2016 2017YTD

No. of Deals Aggregate Deal Value ($bn)


No.

of D

eals

Fig. 26: Private Equity-Backed Buyout Deals in Emerging Markets, 2008 - 2017 YTD (As at May 2017)

Aggregate Deal Value ($bn)

0

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0

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2008 2009 2010 2011 2012 2013 2014 2015 2016 2017YTD

Sale to GP RestructuringIPO Trade SaleAggregate Exit Value ($bn)


No.

of E

xits

Fig. 28: Private Equity-Backed Buyout Exits in Emerging Markets, 2008 - 2017 YTD (As at May 2017)

Aggregate Exit Value ($bn)

Fig. 29: Largest Private Equity-Backed Buyout Deals in Emerging Markets, 2015 - 2017 YTD (As at May 2017)

Portfolio Company Investment Type Deal Date

Deal Size (mn) Deal Status Investor(s) Location Primary

Industry

Qihoo 360 Technology Co. Ltd Public-to-Private Dec-15 9,300 USD Completed

Cathay Capital Group, China Renaissance Partners, CITIC Securities,

Golden Brick Capital Management, Huatai Ruilian Fund Management, Ping An Insurance Group, Sequoia Capital,

Sunshine Insurance, Taikang Life

China Software

Homeplus Buyout Sep-15 4,240 GBP Completed

CPP Investment Board, MBK Partners, National Pension Service, Public Sector

Pension Investment Board, Temasek Holdings

South Korea

Retail

Wuxi PharmaTech Co., Ltd Public-to-Private Aug-15 3,300 USD Completed

Ally Bridge Group, Boyu Capital, Hillhouse Capital Management, Ping An

Insurance Group, Temasek HoldingsChina Pharmaceuticals




VENTURE CAPITALDEALS & EXITS

+8%Growth in aggregate venture capital deal value from 2015 to 2016 to a record $57bn.

90%of venture capital deals in emerging markets in 2016 were located in Emerging Asia.

238venture capital-backed exits took place in emerging markets in 2016, down on the record 318 seen in 2015.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017YTD

Africa Central & Eastern EuropeEmerging Asia Latin AmericaMiddle East


Prop

ortio

n of

Dea

ls

Fig. 31: Venture Capital Deals* in Emerging Markets by Sub-Region, 2008 - 2017 YTD (As at May 2017)

Fig. 33: Largest Venture Capital Deals* in Emerging Markets, 2015 - 2017 YTD (As at May 2017)

Portfolio Company Deal Date Stage Deal Size (mn) Investor(s) Location Primary Industry

Didi Chuxing Apr-17Unspecified

Round5,500 USD

Bank of Communications, China Merchants Bank, Silver Lake, Softbank

China Telecoms

Ant Financial Services Group Apr-16

Series B/Round 2

4,500 USDCCB Trust, China Development Bank Capital, China

Investment Corporation, China Life Insurance Company, China Post Capital, Primavera Capital

China Internet

Meituan-Dianping Jan-16Unspecified

Round3,300 USD

Baillie Gifford, Capital Today, China Development Bank Capital, CPP Investment Board, DST Global, Hillhouse Capital Management, Sequoia Capital, Temasek Holdings, Tencent, Trustbridge Partners

China Internet


694 641972

1,392 1,4461,697

2,419

3,964 3,850

1,039

0

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70

0

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1,000

1,500

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2008 2009 2010 2011 2012 2013 2014 2015 2016 2017YTD



No.

of D

eals

Fig. 30: Venture Capital Deals* in Emerging Markets, 2008 - 2017 YTD (As at May 2017)


0

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35

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45

0

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350

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017YTD

Africa Central & Eastern EuropeEmerging Asia Latin AmericaMiddle East Aggregate Exit Value ($bn)


No.

of E

xits

Fig. 32: Venture Capital Exits by Sub-Region, 2008 - 2017 YTD (As at May 2017)

Aggregate Exit Value ($bn)

*Figures exclude add-ons, grants, mergers, secondary stock purchases and venture debt.


11


AFRICA

21

11

18 19 18

27

16 16

11

21.2 1.5 2.3 2.10.8

3.01.6

4.6

1.70.2

0

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15

20

25

30

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017YTD



Year of Final Close

Fig. 34: Africa-Focused Private Equity Fundraising, 2008 - 2017 YTD (As at May 2017)

33%45%

34%

27%

12%8%

15% 13%

4% 3%2% 4%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Africa Based Developed Markets Based

$100bn or More

$50-99.9bn

$10-49.9bn

$5-9.9bn

$1-4.9bn

Less than $1bn


Prop

ortio

n of

Inve

stor

s

Fig. 35: Assets under Management of Africa- vs. Developed Markets-Based Private Equity Investors (As at May 2017)

79

5848

62

73 77

92

78

111

34

0

1

2

3

4

5

6

7

0

20

40

60

80

100

120

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017YTD



No.

of D

eals

Fig. 36: African Private Equity-Backed Buyout Deals, 2008 - 2017 YTD (As at May 2017)

1419 21

26

4641 41

5753

17

0

100

200

300

400

500

600

700

0

10

20

30

40

50

60

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017YTD

No. of Deals Aggregate Deal Value ($mn)


No.

of D

eals

Fig. 37: African Venture Capital Deals*, 2008 - 2017 YTD (As at May 2017)

Aggregate Deal Value ($m

n)


*Figures exclude add-ons, grants, mergers, secondary stock purchases and venture debt.**€375mn financing round includes a €75mn round announced in February 2016, a €225mn round announced in March 2016 and a €75mn round announced in April 2016.

Fig. 38: Largest African Private Equity-Backed Buyout Deals, 2015 - 2017 YTD (As at May 2017)

Portfolio Company Deal Date Deal Size (mn) Location

Tenke Fungurume Mining S.A.R.L. Nov-16 1,136 USD

Democratic Republic of Congo

Tsebo Sep-16 5,250 ZAR South Africa

Oando's Downstream Business Jun-15 276 USD Nigeria

North Africa Hospital Holdings Group

Mar-15 200 USD Egypt

Oando Gas and Power Limited

Sep-16 116 USD Nigeria


Fig. 39: Largest African Venture Capital Deals*, 2015 - 2017 YTD (As at May 2017)


Africa Internet Group** Apr-16 375 EUR Nigeria

Takealot Online (Pty) Ltd. Apr-17 960 ZAR South Africa

Takealot Online (Pty) Ltd. Jun-15 716 ZAR South Africa

Smile Telecoms Holdings Limited

Sep-15 50 USD Mauritius

Travelstart Online Travel Operations Pty LTD.

Feb-16 40 USD South Africa




CENTRAL & EASTERN EUROPE

31

21

15

29

2528

21 20

9

1

5.73.3

0.72.4

4.7 5.62.6 2.2 1.3

0

5

10

15

20

25

30

35

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017YTD



Year of Final Close

Fig. 40: Central & Eastern Europe-Focused Private Equity Fundraising, 2008 - 2017 YTD (As at May 2017)

52%45%

29%27%

2%8%

8% 13%

8% 3%4%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Central & EasternEurope Based

Developed MarketsBased

$100bn or More

$50-99.9bn

$10-49.9bn

$5-9.9bn

$1-4.9bn

Less than $1bn


Prop

ortio

n of

Inve

stor

s

Fig. 41: Assets under Management of Central & Eastern Europe- vs. Developed Markets-Based Private Equity Investors

120

61

110

127

9991

76 7378

33

0

1

2

3

4

5

6

7

8

9

0

20

40

60

80

100

120

140

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017YTD



No.

of D

eals

Fig. 42: Central & Eastern European Private Equity-Backed Buyout Deals, 2008 - 2017 YTD (As at May 2017)

52 54

105

138

181

205

170

126146

38

0

100

200

300

400

500

600

700

0

50

100

150

200

250

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017YTD



No.

of D

eals

Fig. 43: Central & Eastern European Venture Capital Deals*, 2008 - 2017 YTD (As at May 2017)


n)



Fig. 44: Largest Central & Eastern European Private Equity-Backed Buyout Deals, 2015 - 2017 YTD (As at May 2017)


Allegro Group Sp. z oo Oct-16 3,253 USD Poland

Slovak Telekom May-15 900 EUR Slovakia

Profi Rom Food Group Nov-16 533 EUR Romania

PKP Energetyka Jul-15 1,965 PLN Poland

Pharmathen Jun-15 400 EUR Greece


Fig. 45: Largest Central & Eastern European Venture Capital Deals*, 2015 - 2017 YTD (As at May 2017)


Food Union Group Feb-17 225 USD Latvia

Virtus.pro Oct-15 100 USD Russia

Dauria Aerospace Oct-15 70 USD Russia

2GIS Oct-15 40 USD Russia

CarPrice Jul-15 40 USD Russia



13


EMERGING ASIA

220 225

296

379

301

260243

206

144

425123

4170

50 4064

50 3915

0

50

100

150

200

250

300

350

400

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017YTD



Year of Final Close

Fig. 46: Emerging Asia-Focused Private Equity Fundraising, 2008 - 2017 YTD (As at May 2017)

28%

45%

22%

27%6%

8%25%

13%9%

3%9% 4%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Emerging Asia Based Developed Markets Based

$100bn or More

$50-99.9bn

$10-49.9bn

$5-9.9bn

$1-4.9bn

Less than $1bn


Prop

ortio

n of

Inve

stor

s

Fig. 47: Assets under Management of Emerging Asia- vs. Developed Markets-Based Private Equity Investors

221 206

313

399362

326290

226201

60

0

5

10

15

20

25

30

35

40

45

0

50

100

150

200

250

300

350

400

450

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017YTD



No.

of D

eals

Fig. 48: Private Equity-Backed Buyout Deals in Emerging Asia, 2008 - 2017 YTD (As at May 2017)

591 520795

1,130 1,0721,270

2,047

3,6223,484

920

0

10

20

30

40

50

60

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017YTD



No.

of D

eals

Fig. 49: Venture Capital Deals* in Emerging Asia, 2008 - 2017 YTD (As at May 2017)




Fig. 50: Largest Private Equity-Backed Buyout Deals in Emerging Asia, 2015 - 2017 YTD (As at May 2017)


Qihoo 360 Technology Co. Ltd Dec-15 9,300 USD China

Homeplus Sep-15 4,240 GBP South Korea

Wuxi PharmaTech Co., Ltd Aug-15 3,300 USD China

McDonald's Outlets in China and Hong Kong

Jan-17 2,100 USD China

Woori Bank Co., Ltd Nov-162,400,000

KRWSouth Korea


Fig. 51: Largest Venture Capital Deals* in Emerging Asia, 2015 - 2017 YTD (As at May 2017)


Didi Chuxing Apr-17 5,500 USD China

Ant Financial Services Group Apr-16 4,500 USD China

Meituan-Dianping Jan-16 3,300 USD China

Didi Chuxing Jun-16 2,800 USD China

Didi Chuxing Jul-15 2,000 USD China




LATIN AMERICA

26

15

27

35 34

25

29 28

13

75.3

2.4

7.110.3

4.1 3.3

7.7

2.8 1.8 0.50

5

10

15

20

25

30

35

40

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017YTD



Year of Final Close

Fig. 52: Latin America-Focused Private Equity Fundraising, 2008 - 2017 YTD (As at May 2017)

35%45%

32%

27%

8%8%

22% 13%

3%4% 4%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Latin America Based Developed Markets Based

$100bn or More

$50-99.9bn

$10-49.9bn

$5-9.9bn

$1-4.9bn

Less than $1bn


Prop

ortio

n of

Inve

stor

s

Fig. 53: Assets under Management of Latin America- vs. Developed Markets-Based Private Equity Investors

85

56

76

90 88

6569 70

76

29

0

1

2

3

4

5

6

7

8

9

0

10

20

30

40

50

60

70

80

90

100

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017YTD



No.

of D

eals

Fig. 54: Latin American Private Equity-Backed Buyout Deals, 2008 - 2017 YTD (As at May 2017)

2837 41

83

113

152

137127

143

56

0

100

200

300

400

500

600

700

800

900

0

20

40

60

80

100

120

140

160

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017YTD



No.

of D

eals

Fig. 55: Latin American Venture Capital Deals*, 2008 - 2017 YTD (As at May 2017)


n)



Fig. 56: Largest Latin American Private Equity-Backed Buyout Deals, 2015 - 2017 YTD (As at May 2017)


Odebrecht Ambiental S.A. Aug-16 5,300 BRL Brazil

Fermaca May-15 500 USD Mexico

Rede D'Or Sao Luiz Apr-15 499 USD Brazil

BR Properties Dec-15 1,870 BRL Brazil

Petrobras Chile Distribuición Ltda

May-16 470 USD Chile


Fig. 57: Largest Latin American Venture Capital Deals*, 2015 - 2017 YTD (As at May 2017)


99Taxis Jan-17 100 USD Brazil

Nubank Brasil Dec-16 80 USD Brazil

Hotel Urbano Jul-15 60 USD Brazil

Linio International Marketplace

Sep-16 50 EUR Mexico

Nubank Brasil Jan-16 52 USD Brazil



15


MIDDLE EAST

13

8

6

109

5 5

9

32

3.0

1.40.8 1.0

2.9

0.21.3

0.3 0.2 0.010

2

4

6

8

10

12

14

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017YTD



Year of Final Close

Fig. 58: Middle East-Focused Private Equity Fundraising, 2008 - 2017 YTD (As at May 2017)

32%45%

20%

27%11%

8%22%

13%4%3%10%4%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Middle East Based Developed Markets Based

$100bn or More

$50-99.9bn

$10-49.9bn

$5-9.9bn

$1-4.9bn

Less than $1bn


Prop

ortio

n of

Inve

stor

s

Fig. 59: Assets under Management of Middle East- vs. Developed Markets-Based Private Equity Investors

29

15

20 2123

21

25

14 13

10.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

0

5

10

15

20

25

30

35

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017YTD



No.

of D

eals

Fig. 60: Middle Eastern Private Equity-Backed Buyout Deals, 2008 - 2017 YTD (As at May 2017)

911 10

15

34

29

24

32

24

8

0

100

200

300

400

500

600

700

800

0

5

10

15

20

25

30

35

40

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017YTD



No.

of D

eals

Fig. 61: Middle Eastern Venture Capital Deals*, 2008 - 2017 YTD (As at May 2017)


n)



Fig. 62: Largest Middle Eastern Private Equity-Backed Buyout Deals, 2015 - 2017 YTD (As at May 2017)


Kudu Feb-15 400 USD Saudi Arabia

Al Borg Medical Laboratories Jun-16 270 USD Saudi Arabia

FINE May-15 175 USD Jordan

QNIE's Frozen Distribution Business

Oct-15 140 USD Qatar

Middlesex University Dubai

Sep-16 55 USDUnited Arab

Emirates


Fig. 63: Largest Middle Eastern Venture Capital Deals*, 2015 - 2017 YTD (As at May 2017)


Careem Dec-16 350 USDUnited Arab

Emirates

Souq.com FZ-LLC Feb-16 275 USDUnited Arab

Emirates

Wadi.com Feb-16 67 USDUnited Arab

Emirates

Careem Nov-15 60 USDUnited Arab

Emirates

MSPharma May-17 45 USD Jordan


PREQIN

Alternative Assets Data & Intelligence

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■ Investors – Allocations, Strategies/Plans and Current Portfolios ■ Fund Managers – Funds, Strategies and Track Records ■ Funds – Fundraising, Performance and Terms & Conditions ■ Deals/Exits – Portfolio Companies, Participants and Financials ■ Service Providers – Services Offered and Current Clients ■ Industry Contacts – Direct Contact Details for Industry Professionals

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PREQIN SPECIAL REPORT:PRIVATE EQUITY IN EMERGING MARKETS

JULY 2017


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PREQIN SPECIAL REPORT: PRIVATE EQUITY IN EMERGING … · placed in the context of the rapid expansion of private equity in emerging markets; since the end of 2005, assets held for