It would be difficult to identify any prior circumstance where so many private equity people keen on the socalled emerging markets congregated as at last month's eighth annual iteration of the International Finance Corporation Global Private Equity Conference in Washington, organised in conjunction with the Emerging Markets Private Equity Association. More than 600 delegates filled the amphitheatre of the Ronald Reagan Building, with standing room only during some presentations.
An informal show of hands at the beginning of Carlyle founder David Rubenstein's opening address revealed that emerging markets private equity now attracts a truly international crowd, encompassing not only professionals hailing from Asia, but also including private equity enthusiasts in Latin America, Africa and the Middle East. A good mix of GPs – and a surprisingly substantial number of LPs – from around the world were in attendance and sought to make their presence known. When Rubenstein overlooked Africa in his survey of where in the world the audience originated, one delegate made sure to remind him, following which a significant number of African attendees raised their hands. In total, over 50 countries were represented.
Having taken stock, Rubenstein went on to make the point that the term “emerging markets”, while appropriate when it first came into being, no longer fits the bill when it comes to differentiating markets that are at different stages of development. Unsurprisingly given the diversity of the audience, this observation resonated particularly strongly.
Rubenstein proposed a distinction between markets that are truly “emerged” – comprising Brazil, Russia, India, China, Korea, Taiwan and South Africa – and those that are still “emerging” – which includes the economies of Turkey, Thailand, Argentina, Poland, Philippines, Saudi Arabia, Egypt, Malaysia, Czech Republic, Chile, Hungary, Nigeria, UAE and Kuwait, among others. No longer does it make sense to lump China with Chad, or South Africa with Mozambique, he said.
Carlyle itself will dramatically scale up its involvement in the Middle East, Africa and Latin America, Rubenstein said. Given the firm's focus on geographic expansion into new territories, it only makes sense that the firm should be examining the paradigms it uses to identify and categorise the various markets of the world.
Rubenstein's emerged/emerging dichotomy may well catch on, and it could herald a welcome push away from the lacklustre “rest of world” classification that is still in common use – despite its vagueness.
3I INVESTS IN GULF-FOCUSED FUND
London-listed private equity firm 3i has committed $15 million (€19 million) to Dubai-based private equity firm Ithmar Capital's second fund, Ithmar Fund II, which is expected to raise $250 million in total. The fund will focus on growth capital and buyout investments in all market sectors in the UAE, Kuwait, Qatar, Bahrain, Oman and Saudi Arabia. Ithmar Capital set an initial $150 million target for Fund II, but is now expected to raise $250 million. “The expansion in fund size is not only due to high investor demand but, more fundamentally, due to the larger deal sizes that we have been witnessing over the past 12 months,” said Faisal Belhoul.
ABRAAJ TO RAISE $2BN SHARIAH FUND WITH BANKS
Dubai-based Abraaj Capital has announced that it will be forming one of the largest Shariah-compliant investment funds ever raised in the Middle East as part of a joint venture with Germany's Deutsche Bank and Bahraini investment bank Ithmar Bank. Shariah-compliant funds enable Muslim investors to abide by Islamic laws and practices as transactions are subject to religious rules that prohibit gambling, alcohol and pornography, for instance. The so-called Infrastructure and Growth Capital Fund has a $2 billion target, and aims to achieve a 15 percent IRR per annum, according to an announcement from Abraaj, which will act as the fund's investment manager. The fund will take majority or minority stakes in greenfield projects, participate in large-scale privatisations and buyout and restructuring opportunities, as well as provide mezzanine funding to companies in targeted sectors.
INJAZAT HEALTHCARE FUND MOVES FORWARD
MENA-focused Injazat Capital has received a commitment of $37.5 million (€30 million) to its $100 million Injazat Shefa Healthcare Fund from Saudi Health Investment Company. The fund is a Shari'ah compliant venture fund headquartered in Dubai and was launched in December 2005.
ADVENT-BACKED CSU GOES PUBLIC IN BRAZIL
Brazilian outsourced credit card administration service provider CSU CardSystem has raised R$341 million (€130 million, $166 million) through an initial public offering on the Novo Mercado of the Sao Paulo Stock Exchange. CSU is a portfolio company of global private equity firm Advent International.
NEW ACTIS FUND TARGETS AFRICAN AGRIBUSINESS
Emerging markets private equity investor Actis has established a $100 million (€78 million) fund to pursue agribusiness and forestry investments across Africa, according to reports. The Actis Africa Agribusiness Fund's sole investor is British government owned funding facility Commonweal th Development Corporation (CDC).
EMP BUYS INTO TURKISH AIRPORTS
Washington DC-based emerging markets private equity firm EMP Global has announced that its Islamic Development Bank Infrastructure Fund has invested $73 million (€57 million) to acquire TAV Hava Limanlari Isletme. TAV is the holding company for a Turkish airport development, management and operating group called TAV Airports Group, which was established in 1997 and manages a number of airports, including those in Istanbul, Ataturk, and Izmir in Turkey, and two airports in the Georgian Republic. EMP is the first strategic investor for TAV Airports.