Emerging market private equity activity ebbs in 2012

LONDON Tue Nov 6, 2012 10:57am EST

LONDON Nov 6 (Reuters) - Investment and fundraising by private equity firms in emerging economies fell in the first three quarters of 2012, industry body EMPEA said on Tuesday, reflecting the global growth slowdown.

Across emerging markets, fundraising had reached $27.2 billion by end-September, down from $31.3 billion in the same period in 2011, according to data from the Washington D.C.-based Emerging Markets Private Equity Association.

Firms also invested less, committing only $17 billion compared with $22 billion, continuing a trend of private equity funds investing less capital than they raise.

The slowing global economy, including across emerging markets, has caused a fall in foreign direct investments, with many companies preferring to sit on their cash or invest at home rather than overseas.

EMPEA numbers showed that the number of deals fell to 619 from 690.

"A lot of people are just rebalancing right now. There has been a lot of volatility in the ...market over the last year, year-and-and-half," said Jennifer Choi, vice president of industry and external affairs at EMPEA.

"A lot of this just people being very prudent about when to pull the trigger on the deal side," she said, adding that EMPEA did not see the numbers as representing a secular downturn.

Emerging Europe was a bright spot, however, with fundraising in the first nine months at $4.2 billion - more than double the amount raised in all of 2011.

Investments in the region however halved from 2011 levels.

Fundraising slowed especially in Brazil which failed to crack the $2 billion mark in the January-September period after exceeding $7 billion in 2011.

But private equity investments there rose 40 percent from last year's total. (Reporting By Shadia Nasralla; Editing by John Stonestreet)