A THOROUGH UNDERSTANDING OF PRIVATE EQUITY

RETOUR SOMMAIRE

A CACEIS PRODUCT DEVELOPMENT PUBLICATION - 2010

INDUSTRY OVERVIEW

Most markets saw a decline in amounts invested in 2008, the Italian private equity market being a notable exception explained by an increase of buyout operations 29 .

In terms of geographical origin of funds raised in Europe in 2008, most commitments came from European investors (54.5%), with a very significant contribution of domestic sources in France, Germany, Italy and Spain, the United Kingdom being an exception. At the same time, North American LPs contributed 36.5% and Asian & Rest of the world LPs contributed 9% to the funds raised.

1.3.3

The Asian and rest of the world private equity market

1.3

D eveloped A sia Developed Asia is composed of Japan, South Korea, Australia and New Zealand. It is a small market accounting for around 2% of the global private equity investment activity. This is in this region that private equity first emerged in Asia in the 1970s, with the first venture capital deals being completed in Japan. Japan continues to be one of Asia’s most active markets for raising private equity capital. However, this market remains relatively hard to penetrate for foreign investors. The Australian and New Zealand markets are robust and private equity has developed rap- idly in both countries. They offer a legal and tax environment which is similar to Europe’s, while in South Korea, private equity investment is still perceived as risky due to its political instability and recent tightening of regulations that apply to foreign investors 30 . T he emerging markets The emerging markets include emerging Asia, Latin America, Eastern Europe, Russia, the Middle East, and Africa. As displayed in the table hereafter, private equity fund raising for emerging markets reached a record-breaking $66.5 billion in 2008, bucking international trends and represent- ing a 12% increase compared to 2007, before collapsing to $16.2 billion in the first half of 2009. At the same time, private equity investments reached their highest level in 2007 with $53.1 billion, before collapsing to $12.8 billion in the first half of 2009 31 . However, this decline came nowhere near the drop seen in developed private equity markets (the United States, Western Europe and developed Asia).

Figure 19 – Emerging markets private equity global fund raising and investment (2001-H1 2009)

In $bn

2001 2002 2003 2004 2005 2006 2007 2008 H1 2009 6.5 3.2 4.6 6.6 26.5 33.2 59.2 66.5 16.2

Global fund raising- emerging markets

Out of which emerging Asia 5.2 1.1 2.2 2.8 15.4 19.4 28.7 39.7 11.1 Global investment- emerging markets 3.7 2.0 7.0 7.2 11.8 34.7 53.1 47.8 12.8 Out of which emerging Asia 2.0 0.3 4.5 4.3 7.7 22.5 30.4 28.3 10.5 Source: EMPEA (Emerging Markets Private Equity Association), October 2009

29 Source: Grant Thornton, “Private equity for 2008 in the main centres of activity in Europe”, 9 June 2009 30 Source: CAAM CI, “Private equity in the Asia-Pacific region, a high-potential market”, 2007 31 Source: EMPEA, “Emerging markets private equity statistics”, 29 October 2009

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