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EMPEA’s just-released Year-End 2016 Industry Statistics reveal that emerging markets (“EM”) private capital fundraising and investment—inclusive of private equity, private infrastructure and real assets and private credit—declined 9.4% and 12% year-over-year, respectively, despite notable increases in activity across key markets, strategies and sectors.
Fund managers raised a combined total of US$44 billion for emerging economies, down from US$49 billion in 2015. While Latin America and Sub-Saharan Africa experienced the largest declines in capital raised, fundraising for CEE and CIS jumped from US$715 million in 2015 to US$1.8 billion in 2016, which was due in large part to an upswing in commitments to Turkey-focused vehicles. Fundraising for multi-regional funds increased from US$1.1 billion in 2015 to US$3.4 billion this past year, the highest total since 2013. However, fewer large funds raising US$1 billion or more in 2016 left the year-end total behind the post-financial crisis high of US$58 billion raised in 2014. Strategy diversification was on the rise for EM fundraising as private credit and venture capital both reached record highs in 2016.
Investment activity in emerging markets fell slightly in 2016. Fund managers deployed US$28 billion in disclosed transactions in 2016 and completed 1,589 deals across all stages, representing 12% and 8.7% declines, respectively. Waning venture capital (“VC”) and growth private equity (“PE”) investment activity in Emerging Asia this year had a significant impact on EM investment totals, nearly equaling the full difference in disclosed capital invested from 2015 to 2016. The region’s slowdown in capital deployment was a counterweight to increases in other EM regions, with year-on-year increases in Latin America (49%), SubSaharan Africa (10%) and MENA (81%).
Robert van Zwieten, President and CEO of EMPEA, commented, “EMPEA’s annual data illustrate striking trends in emerging markets private capital that emerge under the shadow of large markets and large funds. Most notable were the activity in markets beyond the BRICs and the rebound of the oil and gas sector across regions. Also not to be overlooked, 2016 was a record year for venture capital and private credit fundraising in emerging markets.”