Emerging Markets Private Equity Quarterly Review A Publication of the Emerging Markets Private Equity Association ● Volume V, Issue 2, Q2 2009 June 2009

Viewpoint In This Issue The first half of 2009 has been a dismal time for private equity and venture capi- tal firms worldwide, and emerging markets PE fund managers are seeing their FEATURES share of challenges. The recent upswing in the emerging markets stock indices gives hope that the impact of the financial crisis has already hit bottom in these markets, ahead of developed countries. But even if this trend holds—and it is not Plugging the Financing Gap: yet clear it will—private equity and venture capital fund managers in developing Is There a Growing Role for countries are not out of the woods yet. Mezzanine and Debt Funds? 3 Fundraising for EM PE remains very difficult, with Q1 2009 totals down 71% year-on-year, with no clear rebound in sight. LPs retain a positive outlook for new 2009 LP Survey Results: EM PE investment opportunities and expect outperformance from legacy and LPs Still Find Emerging Markets new funds relative to developed market buyouts. However, near-term financing Private Equity Attractive Despite constraints among many Western LPs will limit their ability to commit substantial Global Economic Downturn 8 funds to the asset class this year. In the midst of this crisis, the financing gap for developing market companies is Fundraising and Investment raising its head, as equity and debt availability is constrained. Fund managers and Slows in Q1 2009 11 development finance institutions are looking at innovative ways to fill the gap us- ing debt and mezzanine fund structures and vehicles, but these nascent efforts are not yet off the ground. Digging for Gold: In the meantime, GPs are laser-focused on their existing portfolios, most of which Global Private Equity contain one if not more businesses whose plan is off-track due to the financial Reports You Should Read 14 crisis. As the Cambridge Associates benchmark statistics show, one-year returns for the asset class have fallen dramatically. While one-year returns are not a har- binger of real returns for this long-term asset class, they do represent the extent 11th Annual Global to which fund managers have had to write down their portfolios both to fairly rep- Private Equity Conference resent current business challenges and to conform with FAS 157 requirements by Highlights­—Washington, DC 16 incorporating public market comparables, if available, in their valuations. Most fund mangers appear to have taken their major write downs at year-end 2008, driving the one-year return to -32%—a painful result, but not as bad as the MSCI EM News and Data Index as of that date (-53%) or the Western European PE Index (-40%).

Member News 18 Despite the gloom, there remains optimism about the long-term outlook for EM PE. The record number of registrants (700) at the 11th Annual IFC/EMPEA Global PE Conference signals a commitment among the industry’s professionals Funds Launched & Closed 20 to work through this crisis. Additionally, the consensus among speakers at the conference was clear: although the number of funds active in the market will decline in the short-term, there will be solid survivors capable of capitalizing on Notable EM PE Exits & IPOs 21 extraordinary opportunities going forward as valuations drop. The growth capital model remains intact in these markets. The need for equity financing isn’t going away and growth continues, so the best fund managers should be well placed EMPEA Members 22 to ride through the storm.

Featured Events 24 Sarah E. Alexander, President Emerging Markets Private Equity Association

Emerging Markets Private Equity Association 1055 Thomas Jefferson St. NW, Suite 650, Washington DC 20007 Tel: +1.202.333.8171 www.empea.net About EMPEA

The Emerging Markets Private Equity Asso- ciation (EMPEA) is an independent, member- Executive Editor based global industry association that pro- Sarah E. Alexander motes greater understanding of and a more favorable climate for private equity and ven- Editorial Director ture capital investing in the emerging markets Jennifer Choi of Africa, Asia, Central/Eastern Europe and Russia, Latin America, and the Middle East. Writing and Research Holly Freedman EMPEA was founded in 2004 with the be- Harrison Moskowitz lief that private equity can be a critical driver Nadiya Satyamurthy of economic growth in emerging markets Scott Scheide while simultaneously generating strong re- turns for investors. Production Blue House In support of its mission, EMPEA: www.bluehouse.us • Researches, analyzes and disseminates authoritative global information on emerg- © 2009 Emerging Markets Private Equity Association ing markets private equity; • Convenes meetings and conferences All rights reserved. Emerging Markets Private Equity Quarterly Review is around the world; a publication of the Emerging Markets Private Equity Association. Neither • Offers professional development programs this publication nor any part of it may be reproduced, stored in a retrieval including monthly Webcasts; and, system, or transmitted in any form or by any means, electronic, mechanical, • Collaborates with stakeholders from photocopying, recording, or otherwise, without the prior permission of the across the globe. Emerging Markets Private Equity Association.

EMPEA’s members represent more than 50 Subscriptions countries and over $500 billion in assets un- For subscription or single issue purchase, visit www.empea.net or email empea@ der management. empea.net. Subscription for one year (4 issues) is US$495. EMPEA members receive the Emerging Markets Private Equity Quarterly Review for free.

Advertising Opportunities The Emerging Markets Private Equity Quarterly Review offers readers an Become a Member analytical and factual look at private equity investing in emerging markets. The Quarterly Review features include regional and country market analysis, an The Emerging Markets Private Equity overview of current trends in the industry, benchmark data from Cambridge Association is the only global body that repre- Associates, and guest articles from leading thinkers and practitioners. sents the growing industry of emerging mar- Its readership comprises a broad array of private equity fund managers, kets private equity. As a leading global player, institutional investors, service providers, and other key stakeholders in the EMPEA offers features that meet the needs of industry from more than 50 countries. a broad range of institutions active in emerg- ing markets, including General Partners (GPs), Advertising opportunities are available for upcoming issues. For more Limited Partners (LPs), business associations, information, please contact Cristiane Nascimento, Communications and service providers, multilateral and academic Marketing Manager, at [email protected] or +1.202.333.8171. institutions, and governmental bodies. EMPEA For more information on how to become 1055 Thomas Jefferson Street NW, Suite 650 a member visit www.empea.net or con- Washington, DC 20007 USA tact Kyoko Terada at [email protected] or Tel: +1.202.333.8171 • Fax: +1.202.333.3162 +1.202.333.8171. www.empea.net

2 EM PE Quarterly Review Vol V Issue 2, Q2 2009 Plugging the Financing Gap: Is There a Growing Role for Mezzanine and Debt Funds?

EMPEA’s first quarter statistics confirm that the emerging markets In these markets, there’s been have not been immune to a dramatic slowdown resulting from the relatively little debt financing global financial crisis. Both fundraising and investment figures have dropped in the first three months of 2009, recording a 71% decline if any, and when there is, it has often in total funds raised and a 69% decline in the aggregate value of in- come at the last minute and is typically vestments made compared to the same time period of the previous sourced locally. That has to change year. In addition, while select emerging markets were previously able to take advantage of a growing supply of acquisition finance to fund because the commercial banks are not deals, the global credit crunch has generally halted lending activity. involved the way they used to be.” —David Creighton, Cordiant Capital More than a year into a changed investment climate, fund managers attest that senior debt—both for acquisitions and long-term capital investment—has generally dried up or become cost-prohibitive. This nancial crisis. The emerging markets in general have witnessed a article explores alternative financing options available to enterprises in smaller percentage of defaults, as deals within these regions were emerging markets for both expansion capital and private equity trans- often structured based on organic growth assumptions regarding an action-related finance. In particular, private debt and mezzanine funds underlying company as opposed to complex financial engineering. are two vehicles that are increasingly garnering attention as much ink has been spilled in recent months speculating on a surge (or resur- However, while the debt markets have not completely closed, the gence) in demand for these financing options to fill the vacuum left by consensus remains that senior lending is nearly impossible to get at commercial banks and other debt providers. any price for the average small or medium enterprise (SME). Lenders are more cautious about which companies and projects they back. In Private debt funds are a relatively new financing structure in the China, India and Brazil, local commercial banks remain quite strong, emerging markets and to date are available in limited supply. The field and short-term working capital continues to be available in these mar- of mezzanine capital, although somewhat more developed than debt kets despite banks reverting to more conservative pre-lending boom vehicles, similarly remains quite thin. A niche for debt and mezzanine protocols. For example, Chinese banks lent roughly US$670 billion products clearly exists within emerging economies; however, most during the first quarter of 2009, almost the same amount provided industry players characterize these markets as insufficiently devel- in all of 2008, suggesting that short-term capital within the country oped and believe few firms boast the right blend and depth of skills remains in great supply. However, this new lending is focused on required to successfully execute these more specialized products. strategic companies and sectors, primarily infrastructure, autos, tex- tiles and chemicals, and companies with a strong and loyal domestic State of Current Debt Markets customer base. Export-oriented and smaller companies will likely be left out under this new model. In 2008, global yield spreads as reflected in JPMorgan’s Emerging Mar- ket Bond Index (EMBI) rose approximately 123% from the first quarter Exhibit 1: 2008 Emerging Market Bond Index: Global to the fourth quarter (see Exhibit 1), significantly raising the cost of debt Yield Spreads (in basis points) to reflect greater perceived risk, and thus choking off, or making prohibi- 2008 tively expensive, what had previously been a strong source of credit for emerging market companies. But while credit markets have certainly Q1 Q2 Q3 Q4 tightened, industry participants have largely debunked the notion that EMBI Global 324 308 442 724 liquidity has dried up entirely in emerging markets. Brazil 283 227 333 429 Orli Arav, a Director at Frontier Markets Fund Managers (FMFM), a Colombia 258 221 318 498 fund management team that manages a number of public-private debt funds, believes that financing is still available for the right deal. Mexico 193 194 275 434 “There will always be an appetite for good projects,” Arav said. In China 154 137 191 228 this regard, David Creighton, President & CEO of Cordiant Capital, a fund manager that specializes in both private equity and debt, Indonesia 329 381 490 762 pointed to an oil deal currently underway in Ghana as a prime ex- Vietnam 283 368 404 747 ample of how companies that are strategically sound are still able to attract capital. Noted Creighton, “The Kosmos Energy deal is fully Egypt 258 201 333 385 subscribed, as it’s a well structured deal in a good country. There is Hungary 163 134 174 504 also commercial bank activity in that deal because the banks want to build a relationship with the oil company.” Russia 208 197 388 805 South Africa 271 232 364 562 In addition, some liquidity continues to exist for larger companies thanks to a history of more conservative lending practices among Turkey 348 384 391 534 most local institutions and consequently limited exposure to the fi- Source: JPMorgan Chase & Co., International Monetary Fund.

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EM PE Quarterly Review Vol V Issue 2, Q2 2009 3 Plugging the Financing Gap, continued from page 3

Beyond increasing conservatism among local banks, international Financing Alternatives Available commercial lenders have withdrawn from the local lending scene. In light of the financing gap, particularly for SMEs, the role of the de- Private providers of debt offer similar terms to those that a DFI would velopment finance institutions (DFIs)—long the source of the bulk of charge, but do so in a more commercially-oriented decision making debt supplied to emerging market enterprises—has become even structure and investment process. As FMFM’s Arav states, “We’ll do more critical. Arav noted, “Generally, the commercial banks are not smaller deals than DFIs would be interested in doing, and as a small in the market right now. The South African and UK banks selectively team we can act more quickly. The key differentiator is the timing of our invest in higher end projects or come back into the market to cherry- deals. We can complete processing within a few weeks if needed.” pick good customers for relationship reasons, leaving some DFI [lend- ing] capacity available that these projects would otherwise take up.” Alongside private debt funds, mezzanine fills a gap, particularly for small- and mid-cap companies that are unable to borrow all the funds The International Finance Corporation (IFC), a leading lender to that they require due to limited collateral, a short operating history or emerging market companies, is currently focused on continuing high leverage ratios. Furthermore, banks may not be able to lend to to provide capital to enterprises on a direct basis, and looks at dis- them due to internal liquidity or risk profile constraints, as well as the tressed opportunities through funds, rather than debt or mezza- desire to preference relationship customers and strategic or more prof- nine. According to sources within the IFC, given the organization’s itable transactions. Simon Sham, a Managing Director at Darby Asia In- expertise in direct lending, backing new debt or mezzanine funds vestors who overseas their Asia Mezzanine Fund II, noted that his firm isn’t the best use of IFC resources at this time. Further, the cost of specifically focuses on growth capital to mid-sized companies, where the PE fund model (e.g., 2% management fees) is hard to justify this financing vacuum is most acutely felt. “The big international lend- given the lower returns expected from debt funds compared to ers aren’t interested in smaller enterprises, and the local banks in places equity funds. like China and India are more interested in asset-based lending.”

Whilst the mezzanine offering While these companies could potentially go to the private equity mar- kets for financing, many recognize that doing so is usually highly dilu- does not suit all enterprises, tive. In discussing the mezzanine structure employed by Darby Asia, it’s non-dilutive, subordination and Sham remarked, “Ours is a more passive investment relative to that cashflow-friendly features, together of the private equity investor—the investee pays a higher interest ex- with it often being the last dollar that pense but retains a higher degree of control,” he said. unlocks a deal, makes it attractive to According to global alternative investment firm Probitas, managers of many recipients. In many developing mezzanine funds raised US$27 billion worldwide in 2008. Until recently, “sponsorless” mezzanine, or mezzanine financing without a private eq- or emerging economies it comes down uity fund sponsor, was the most common application within emerging to a need to further educate the market markets. However, private equity sponsors have begun to see the ben- and therein lies the opportunity.” efits of mezzanine in transacting deals, particularly in the current lending environment. Private equity firms are increasingly looking to mezzanine —Simon Morgan, Standard Bank providers to help them leverage up to the ROE necessary.

Some independent private debt funds have stepped into the void With regards to the relationship between mezzanine providers and in recent years. These include the Emerging Africa Infrastructure private equity partners, Eduardo Farhat, Principal and Head of Infra- Fund, which is managed by FMFM (a division of Standard Bank) structure Brazil at Darby Stratus Administradora de Investimentos, and backed by several European governments and DFIs, as well believes that valuing the equity of a company that has high growth as a handful of private partners, including Standard Bank of South potential is one of the most complicated aspects of structuring a deal Africa, Germany’s KfW and Barclays. FMFM also manages the re- in the current financial scenario. “If you structure a standard equity cently launched GuarantCo, a credit enhancement fund that facili- transaction, you can take a hit because the dilution effect is quite tates funding in local currency to projects in sub-Saharan Africa and strong in the current marketplace. Mezzanine replaces that equity across the emerging markets. Another active player in the field is without the same rate of dilution. Mezzanine investment builds in Canada’s Cordiant Capital, which has been providing private debt downside protection and allows for the allocation of risk of the project solutions to emerging market enterprises since 2001 and is now in a more efficient manner.” raising its fourth debt fund. Mezzanine providers are also occasionally stepping in to fill the senior The activities of Cordiant, FMFM and Standard Bank are all closely debt gap on deals that are being refinanced, although activity is still affiliated with the development finance institutions, either as spon- relatively minimal as overall transaction volume has slowed dramati- sors, providers of subordinated or senior debt, or as partners in deal cally. Nonetheless, the current economic environment is marking a sourcing. However, while these firms fill an important niche, none shift for mezzanine funds from providers of expansion capital to the of the debt providers we spoke with suggested a vast untapped only source of leverage available. market for these private debt products in emerging markets, due largely to the still limited appetite for debt among investees and Cordiant’s Creighton affirms that sources of capital are diminish- the limited field of players capable of successfully executing on ing. “In these markets, there’s been relatively little debt financing if these products. any, and when there is, it has often come at the last minute and is

Continued on page 5

4 EM PE Quarterly Review Vol V Issue 2, Q2 2009 Plugging the Financing Gap, continued from page 4 typically sourced locally. That has to change because the commercial panies who now find themselves exposed to more volatile demand banks are not involved the way they used to be,” he said. The real op- and cost structures. portunity for mezzanine funds will be to fill this gap. While Creighton noted that Cordiant has formed a greater number of partnerships with Discussing transaction volume from his perspective at Darby Asia, equity investors over time, a lack of familiarity with mezzanine among Sham noted, “Our last deal was in December 2008. Relative to six to local equity investors has prevented greater cooperation. “Private eq- nine months ago, things have really slowed down. Return expecta- uity has played a role in probably half of the deals we’ve done, but it’s still tions among some investors have increased 500-1,000 basis points to relatively new to us, largely because the private equity sponsors have not account for the higher perceived risk in the market. Additionally, many become familiar with us. Most of our work to date has been in partner- mid-sized companies have put their capital expenditures and other ship with the multilateral institutions or on our own,” Creighton said. growth plans on hold. A new project might make sense at a cost of capital of 14–15%, but not at 25%.” Luc Albinski, Managing Partner at Vantage Capital Group, which man- aged the first independent mezzanine fund in Africa, believes that The Pros & Cons of Debt, Mezzannine mezzanine financing is essentially an offshoot of the private equity industry. “Aspiring fund managers get attracted to the promise of Financing for Investors much higher returns on private equity, and mezzanine is simply an af- For Limited Partners (LPs), debt and mezzanine funds offer a terthought. As a product, it’s only when the market is well developed lower risk way to access markets since investments tend to be that managers begin looking for niches in the marketplace.” self-liquidating and unlike equity, they don’t rely on IPOs or trade sales. Debt offers a more conservative way to diversify one’s Simon Morgan, Director of the Private Equity Division at Standard portfolio by providing better downside protection, and many Bank, agrees but also sees mezzanine financing as an instrument for believe that an appetite for private (and therefore more actively capital expansion and restructuring. “The market is fairly well devel- managed) debt exists as compared to public debt. According to oped in South Africa, where the major banks invest in stand-alone Creighton, “The early soundings we’ve heard from LPs have mezzanine or alongside private equity investors, but mezzanine re- been generally quite positive. Everyone recognizes that debt has mains a niche in the rest of Africa. As a provider of capital, you’ve got a place in their portfolio, and a comment we’ve heard over and to create the opportunities, to come up with the ideas and go out and over these last few months is that emerging markets is the one market them to an audience in most of Africa that may not be familiar place where LPs need to increase their exposure because that’s with the nuances of the product.” where the growth is.”

There are a lot of concerns UK private equity fund of funds CDC Group recently announced wrapped around debt—exchange plans to invest a greater portion of its portfolio in debt (as much as 20-25% by 2019), beginning with investments in debt funds and controls, repatriation, country risk— eventually expanding to sponsorship of new initiatives in partner- but we’ve been a debt investor in the ship with local institutions. This shift in strategy signifies CDC’s poorest countries for nearly 60 years attempt to find innovative ways to more deeply penetrate poorer markets within East and Central Africa that are otherwise challeng- now and we’ve done very little in ing to access through a pure equity model. CDC’s Chief Executive terms of country write-offs.” Richard Laing noted, “If we relied solely on equity, our portfolio —Hywel Rees-Jones, CDC Group would be overweighted to the bigger markets where private eq- uity is more established.” A lack of familiarity or understanding of this vehicle among entrepre- Although promising lower returns, the downside protection and cash neurs has also caused mezzanine to remain an underutilized financing flows that both debt and mezzanine funds afford are attractive to option. In markets where liquidity remains relatively more plentiful, investors. CDC’s Laing points to the fact that although returns with mezzanine providers are still competing for attention. “Whilst the debt are lower, the cash flows tend to be more predictable than with mezzanine offering does not suit all enterprises, it’s non-dilutive, sub- equity. “The great thing about debt is that it’s self-liquidating, which is ordination and cashflow-friendly features, together with it often being helpful in terms of cash flows on our balance sheet.” Creighton noted the last dollar that unlocks a deal, makes it attractive to many recipi- that debt funds provide a way for investors to “gain a conservative ex- ents. In many developing or emerging economies it comes down to a posure to new markets, with a better handle on the downside, due to need to further educate the market and therein lies the opportunity,” a much more hands-on approach and direct access to management. according to Standard Bank’s Morgan. The risk/reward profile for such exposure is appealing.” Despite the consensus about the persistent and profound financing gap in emerging markets, the role of mezzanine and private debt pro- Outlook viders remains relatively narrow. At the larger end of the spectrum, deals remain stalled for liquidity reasons—commercial banks with- There are several new products rumored or known to be in the de- drawing from the acquisition finance space means that use of mez- velopment stage, however, nearly all are helmed by existing mez- zanine to transact buyouts has slowed or stopped. In the mid-market, zanine or debt specialists. Hywel Rees-Jones, Managing Director the more prevailing obstacles to deal flow are a residual disconnect at CDC Group, confirmed this trend. “There are relatively few debt on pricing and terms as well as stalled expansion plans among com- products. Although we’re hearing about some things in the very

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EM PE Quarterly Review Vol V Issue 2, Q2 2009 5 Plugging the Financing Gap, continued from page 5

Exhibit 2: Sampling of Debt and Mezzanine Funds Investing in Emerging Markets

Fund Manager Fund Name Fund Type Vintage Year, Fund Size Geography Focus

Asia Mezzanine Capital Group (AMCG) Asia Strategic Capital Fund Mezzanine 2007, US$400m Asia

Algeria, Egypt, Vantage Risk Capital Vantage Mezzanine Fund II Mezzanine Raising, US$300m Kenya, Nigeria, Tunisia and Morocco

Kendall Court Capital Partners Kendall Court Mezzanine (Asia) Fund I Mezzanine 2004, US$400m Southeast Asia

Frontier Markets Fund Managers/ Emerging Africa Infrastructure Debt/Project Standard Infrastructure Fund 2002, US$500m Sub-Saharan Africa Fund Finance Managers Africa Frontier Markets Fund Managers/ Emerging Markets Debt (Credit Standard Infrastructure Fund GuarantCo 2009, US$150m (OECD DAC Enhancement) Managers Africa Countries) 2008, US$150m NBK Capital-GSC Mezzanine NBK Capital and GSC Group Mezzanine (targeting up to MENA, Turkey Fund US$200m)

Blended Equity/ Development Principles Group (DPG) Development Principles Fund II Raising, US$250m China Mezzanine

Mezzanine Management Central CEE, Russia, Accession Mezzanine Capital III Mezzanine Raising, EUR350m Europe Ukraine, Turkey

Intermediate Capital Asia Pacific Intermediate Capital Group (ICG) Mezzanine 2008, US$1B Asia Fund 2008

Darby Overseas Investments and Darby-Stratus Brazil Mezzanine Mezzanine 2008, US$236m Brazil Stratus Group Infrastructure Fund

Darby Overseas Investments Darby Asia Mezzanine II Mezzanine 2005, US$300m Asia

Cordiant Capital Cordiant Emerging Loan Fund III Debt 2007, US$450m Emerging Markets

Mezzanine Investment Partners, Mezzanine Investment Partners Shari’ah Compliant SHUAA Capital, Amwal Al Khaleej, 2008, US$200m GCC countries II Mezzanine Qinvest

Standard Asset Management and Standard Africa Development Debt Raising, US$300m Sub-Saharan Africa STANLIB Fund

CLSA Capital Partners MezzAsia Capital Mezzanine 2003, US$200m Asia

BanyanTree Finance BanyanTree Growth Capital Mezzanine 2008, US$125m India

Bulgaria, Moldova, Emerging Europe Accession Axxess Capital 3 Mezzanine Raising, EUR200m Romania,Turkey and Fund Ukraine

Poland, the Czech Syntaxis Capital Syntaxis Mezzanine Fund II Mezzanine Raising, EUR250m Republic and Slovakia

Acces Capital Atlantique CapMezzanine Maroc Mezzanine Raising, EUR45m Morocco

Continued on page 7

6 EM PE Quarterly Review Vol V Issue 2, Q2 2009 Plugging the Financing Gap, continued from page 6

[The debt fund space]… Regarding risk concerns, CDC’s Rees-Jones believes that perception is overshadowing reality. “There are a lot of concerns wrapped around requires specialized skills debt—exchange controls, repatriation, country risk—but we’ve been around credit risk assessment, a debt investor in the poorest countries for nearly 60 years now and which means that the best teams we’ve done very little in terms of country write-offs.” The level of defaults in the emerging markets in general have tended to be lower will probably come out of home- than in Western markets because leverage is not as highly employed grown or international banks with and companies tend to borrow only when they need to. A climate of extensive local experience.” strong covenants has also insulated many enterprises within emerg- ing regions from greater financial harm. —Richard Laing, CDC Group Standard Bank’s Morgan, however, notes that most private equity early stages, it’s still a relatively small universe. We would have to portfolios are under some degree of stress at the moment, if not work with partners to set up debt funds to invest in.” underwater. “Those who have the mezzanine strips or senior debt in these companies are also feeling the heat, adding to the general lack Additionally, few if any private equity firms appear to be venturing into of liquidity, risk aversion and wait-and-see attitude. It’s hard to say the debt fund space. According to CDC’s Laing, this may not neces- how many portfolio companies have gone out of business, but what’s sarily be negative. “We’re not that keen to have lots of people with- clear is that fewer deals are being done and a significant amount of out experience entering the space. It requires specialized skills around attention is being given to what was acquired in the past.” credit risk assessment, which means that the best teams will probably come out of home-grown or international banks with extensive local ex- Despite the shortage of a broad universe of providers and prod- perience.” Vantage Capital’s Albinski agrees. “One of the reasons this ucts within the private debt and mezzanine markets, the potential universe remains small is that it takes a specialized skill set. It requires benefits of these vehicles to both investors and investees is clear. expertise in debt structuring, credit assessment and private equity Noting the lack of mezzanine providers in Asia, Darby Asia’s Sham skills.” He anticipates that it is unlikely that a new crop of mezzanine believes that as risk tolerance comes down, the mezzanine product providers will enter the market in the current fundraising environment. will become a more popular form of financing, particularly among in- “We’ll see existing players consolidating their positions or raising suc- vestors seeking exposure with downside protection. “As borrowers cessor funds,” he stated. New entrants are only likely to emerge once become more sophisticated about the true cost of capital, I expect risk appetite returns to more traditional levels. demand to grow as well.” ■

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EM PE Quarterly Review Vol V Issue 2, Q2 2009 7 LPs Still Find Emerging Markets Private Equity Attractive Despite Global Economic Downturn

Emerging markets continue to present attractive investment EM PE uses a more growth- opportunities, particularly in comparison to developed markets, according to Limited Partners (LPs) that participated in the 2009 oriented private equity model EMPEA/Coller Capital Emerging Markets Private Equity Survey and is thus not as affected as large undertaken in January-February of this year. The 5th edition of mega-buyout funds in developed the Survey, which aims to provide a snapshot of investor at- titudes towards emerging markets private equity (EM PE) and markets suffering from liquidity corresponding investment plans, produced a number of surpris- and access to finance concerns.” ing findings given the depth of the financial downturn at the time the survey was conducted. In particular, investors remain —LP Survey Participant committed to EM PE as an asset class and do not anticipate a wholesale retreat in the near-term despite ongoing cash con- returns of 16% or greater on new and existing commitments straints generated by the global economic crisis. in their global private equity portfolios.

In the current environment, emerging markets represent a key In addition to relatively stronger economic growth, several in- segment of portfolios because investors want to capitalize on vestors cited lower dependence on leverage as the leading continued positive economic growth and because deals within reason for why emerging markets funds are likely to outper- these regions generally do not require leverage, which is con- form developed market funds of equivalent vintages. Since strained in today’s marketplace. Of the 156 LPs polled from private equity deals in emerging markets don’t rely on debt, around the globe, over three-quarters of those already invest- the collapse of the global leveraged finance markets won’t ed in emerging markets plan to commit to additional managers impede deal flow. One respondent noted, “EM PE uses a and/or geographies over the next five years, while half expect more growth-oriented private equity model and is thus not as to increase commitments within the next two years. Addition- affected as large mega-buyout funds in developed markets ally, 62% of these investors anticipate that the dollar value of suffering from liquidity and access to finance concerns.” their new commitments in 2009 will rise relative to their 2008 commitments (see Exhibit 1). While the Western private equity community, which has tradi- tionally relied heavily on leveraged buyouts, has had to reinvent Exhibit 1: Anticipated Level of New Commitments to itself several times, the EM PE model has largely remained in- EM PE in 2009 Compared to Actual 2008 Commitments

Significantly higher 11% Exhibit 2: Annual Net Return Expectations Across Private Equity Portfolios (3–5 Years) 100 Significantly lower 90 18% Slightly 23% higher 14% 80 Slightly lower 57% 20% 70 About the same 60 37% 50

40 77% 30 According to respondents who plan to reduce their annual 20 43% commitments, cash constraints and private equity over-allo- cation were the primary drivers for scaling back. One quarter 10 of LPs indicated that they would pull back to focus more on developed markets. 0 Global PE Portfolio EM PE Portfolio LPs also believe that new EM PE funds are poised to outper- form developed market counterparts. Over three-quarters of ■ Net returns of less than 16% ■ Net returns of 16%+ survey respondents expect net annual returns to be 16% or greater from new commitments to emerging market private * Coller Capital’s Global PE Barometer. Data relates to returns from existing and new PE commit- equity funds, while 44% anticipate annual net returns of at ments across the PE market as a whole. least 21%. This compares to just 43% of LPs who expect net ** EMPEA/Coller Capital’s Survey. Data relates to returns from new commitments to EM PE funds.

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8 EM PE Quarterly Review Vol V Issue 2, Q2 2009 LP Survey Results, continued from page 8

[Today there is]…more Exhibit 3: Overall Ranking of Attractiveness of Emerging uncertainty with regard Markets/Regions for GP Investment (Next 12 Months) to both investment and exit 2009 2008 environments given that export Survey Survey Change opportunities and credit financing China 1 1 0 have significantly declined.” Brazil 2 4 2

—LP Survey Participant India 3 2 -1 tact. Further highlighting the attractiveness of EM PE, respon- Central & dents remarked that emerging market funds benefit from longer Eastern Europe holding periods. While developed market funds with 2006–2007 (inc Turkey) 4 3 -1 vintages have already invested a large percentage of their capi- Latin America tal, many EM PE funds are still investing and can therefore (ex Brazil) 5 7 2 take advantage of lower entry prices. One survey respondent Africa (ex South remarked, “The current economic environment is a temporary Africa)* 6 5 -1 dislocation where poor managers will have difficulty meeting the funding demands of existing (recently acquired) portfolio in- South Africa 7 9 2 vestments. On the whole, 2009–2010 EM PE should be good vintages due to downward revisions in valuations.” Middle East 8 8 0 Russia/CIS 9 6 -3 Relative to last year’s survey results, there has been a fairly dramatic shift in which regions/countries investors view as * “Pan Africa” in 2008 LP Survey. offering the most attractive investment opportunities for GPs over the next 12 months (see Exhibit 3). While China retained its place as the top-ranked country in terms of attractiveness, Brazil jumped to the second spot this year, displacing India. grade by two of the three leading rating agencies, has been According to the survey, Brazil is well positioned to attract able to benefit from an increase in local pension funds in- the largest net increase of first-time investors within the next terested in the private equity asset class. Alternately, Russia two years, with 11% of LPs looking to begin investing in the experienced the greatest decline in perceived attractiveness country and another 17% planning to increase their current relative to last year in the midst of continued economic and exposure. In addition to strong local demand and a diversified political volatility, with almost three-quarters of LPs rating it domestic economy, Brazil, which is now rated investment- as an “unattractive” investment in 2009.

Exhibit 4: Required Risk Premiums Relative to Developed Market Buyout Funds 2009 2008 Change in Risk Premium

China 6.4% 6.3% 0.1%

India 6.4% 6.1% 0.3%

Brazil 6.4% 6.9% -0.5% Central & Eastern Europe (inc Turkey) 6.4% 5.0% 1.4%

South Africa 7.0% 6.4% 0.6%

Other Emerging Asia 7.3% N/A N/A

Middle East 7.3% 6.5% 0.8%

Latin America (ex Brazil) 7.5% 6.7% 0.8%

North Africa* 8.0% 6.7% 1.3%

Russia/CIS 8.4% 6.9% 1.5% Sub-Saharan Africa (ex South Africa)* 8.4% 6.7% 1.7%

* “Pan Africa” in 2008 LP Survey. Continued on page 10

EM PE Quarterly Review Vol V Issue 2, Q2 2009 9 LP Survey Results, continued from page 9

The 2009 LP Survey confirmed that risk remains a concern in emerging markets. Approximately 73% of LPs believe that the The current economic overall risk of EM PE has increased over the last 12 months, environment is a temporary which is likely correlated with an increased perception of risk dislocation where poor managers will related to investing in private equity as a general asset class. One respondent remarked that today there is “more uncertainty have difficulty meeting the funding with regard to both investment and exit environments given that demands of existing (recently export opportunities and credit financing have significantly de- acquired) portfolio investments. On clined. Additionally, on-the-ground security issues are of growing concern.” The risk premium relative to developed market funds the whole, 2009-2010 EM PE should has thus risen to 7.2% in 2009 compared to 6.7% in 2008 (see be good vintages due to downward Exhibit 4). However, of those investors that believe the risks have revisions in valuations.” elevated, 80% nevertheless plan to increase their exposure to new General Partners (GPs) or geographies. —LP Survey Participant

GPs stand to gain from the fact that interest in emerging mar- with a GP, LPs cited recent poor fund performance (62%), style kets remains high among LPs, including those who are cash con- drift (51%) and capital constraints (49%) as the top three reasons strained. However, although investors remain committed to the (see Exhibit 5). Investors today are increasingly paying attention EM PE asset class, they are also recalibrating relationships and to a GP’s stated fund strategy versus its actual investments as taking a harder look at their portfolios to evaluate performance. they critically evaluate their portfolios. In the short-term, the pri- Just under half of survey respondents that currently invest in mary challenge for these GPs (and for emerging markets private emerging markets reported that they plan to refuse to re-invest equity in general) will be to provide real value to portfolio com- with at least one of their fund managers over the next year. Asked panies that are not growing as quickly as expected, especially as which factors were most likely to deter them from re-investing exit opportunities continue to be delayed. ■

Exhibit 5: Factors Likely to Deter LPs from Re-investing with Some of Their EM PE Managers (Next 12 Months)

Poor performance of a GP’s most recent fund 62%

Style drift at a GP 51%

Capital constraints at an LP 49%

Staff turnover within a GP 41%

Continuity/succession issues at a GP 38%

Changes to an LP’s PE strategy 37%

Terms & conditions of a GP’s fund 27%

GP conflicts of interest 22%

Poor reporting/transparency from a GP 21%

Apportionment of carry within a GP’s team 17%

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

10 EM PE Quarterly Review Vol V Issue 2, Q2 2009 Fundraising and Investment for Emerging Markets Private Equity Slows in Q1 2009

Both fundraising and investment activity in the emerging Exhibit 1: EM PE Fundraising (2006–Q1 2009), US$B markets slowed significantly in the first quarter of 2009, 70 evidence that the global slowdown in private equity had indeed spread beyond developed markets. While single ■ Full Year quarter statistics are not necessarily a harbinger of an entire 60 ■ Q1 year’s performance for a relatively nascent asset class, on the heels of a watershed US$66.5 billion in fresh capital raised and 50 US$47.8 billion invested in 2008, the first quarter slowdown US$66.5bn attests to the challenges facing emerging markets PE fund 40 managers. US$59.2bn

US$Billion 30 Fund closes totaled US$5.2 billion across 22 funds in Q1 2009, down from US$17.9 billion across 55 funds during the same period in 2008 (see Exhibit 1). The 71% drop in fundraising 20 US$33.2bn was more severe than the 60% drop in the number of funds US$25.7bn achieving closes during the quarter, suggesting that managers 10 US$17.9bn are raising somewhat smaller pools of capital than in the year US$13.4bn prior. The precipitous decline in fundraising is consistent with US$6.2bn US$5.2bn 0 private equity fundraising in developed markets: the United 2005 2006 2007 2008 2009 States saw an 81% decline in funds raised in Q1 2009. Source: Emerging Markets Private Equity Association. On the investment side, EMPEA recorded a 69% drop in the aggregate value of investments in the first three months of US$800 million final close of Siguler Guff & Company’s Russia 2009 compared with the same period of the previous year, but Partners III. only a 37% drop in the number of deals closed (see Exhibit 2), with the average investment size dropping by 42%. Aggregate On the positive side, fundraising in the Middle East rose to investment value dropped from US$13.8 billion across 211 US$650 million across two funds, compared with no closes deals in Q1 2008 to US$4.3 billion across 133 deals completed in the same period of the previous year. The Carlyle Group led in Q1 2009. The less severe 37% decline in the number of the region with the close of its maiden MENA fund at US$500 deals suggests that the reduced investment total could be million. Funds raised for the Latin America/Caribbean region attributed to lower valuations or greater interest in lower- rose from US$243 million to US$453 million year-over-year; cap companies in 2009. Average investment size fell from however, the region saw only four funds with closes in the approximately US$78 million in Q1 2008 to US$45 million in quarter, compared with six in Q1 2008. Q1 2009.

Regional Fundraising Results Exhibit 2: EM PE Investment Total (Q1 2008–Q1 2009) The drop in fundraising was most apparent in Emerging Asia, US$B, (Number of Deals) which continued to account for the greatest share of funds raised for emerging markets. Fourteen Emerging Asia funds 15 300 raised US$3.3 billion in Q1 2009, compared to US$15.5 billion raised by 37 funds in Q1 2008, representing a 71% decline in the total value of funds raised. At US$2.3 billion, China-focused funds accounted for the bulk of funds raised for the region, 10 200 greatly exceeding the US$315 million raised for India-focused No. of Deals funds. However, China’s US$2.3 billion includes a US$1.2 billion fund raised by the Shanghai Financial Industrial Fund, part of the Chinese government’s effort to stimulate economic US$Billion US$13.8bn (211) development through the introduction of state-backed private 5 100 equity-style industrial investment funds.

First quarter fundraising for other emerging market regions US$4.3bn (133) remained at relatively low levels and closes were achieved 0 0 by few funds. Africa held no known fund closes during the Q1 2008 Q1 2009 quarter. The CEE/CIS region (Central & Eastern Europe/ Commonwealth of Independent States) saw only one close, a Source: Emerging Markets Private Equity Association.

Continued on page 12

EM PE Quarterly Review Vol V Issue 2, Q2 2009 11 Fundraising and Investment Slows in Q1 2009, continued from page 11

Exhibit 3: EM PE Fundraising (Q1 2008 vs. Q1 2009), Amounts (US$m) and Number of Funds % Change in % Change in # Q1 2008 Q1 2009 US$ value of fund closes Africa 177 (3) 0 N/A N/A Emerging Asia 15,465 (37) 3,263 (14) -79 -62 CEE/CIS 729 (4) 800 (1) 10 -75 Latin America 243 (6) 453 (4) 86 -33 Middle East 0 650 (2) N/A N/A Multi-region 1,239 (5) 25 (1) -98 -80 Total 17,852 (55) 5,190 (22) -71 -60

Exhibit 4: EM PE Investments (Q1 2008 vs. Q1 2009), Amounts (US$m) and Number of Investments % Change in % Change in # Q1 2008 Q1 2009 US$ value of deals Africa 730 (21) 184 (11) -75 -48 Emerging Asia 9,769 (123) 3,362 (80) -66 -35 CEE/CIS 1,348 (30) 488 (25) -64 -17 Latin America 1,548 (17) 100 (7) -94 -59 Middle East 444 (20) 213 (10) -52 -50 Total 13,838 (211) 4,346 (133) -69 -37

Source: Emerging Markets Private Equity Association. Note: Numbers in parentheses represent the number of fund closes and number of deals, respectively.

Only one fund focused on pan-emerging (multi-regional) Lower first quarter investment value in emerging markets is opportunities achieved a close in the quarter, with an consistent with a globally stalled deal market. Emerging market incremental final close of US$25 million. In Q1 2008, five of fund managers cite persistent gaps between buyer and seller such funds raised a total of US$1.2 billion. pricing expectations with many GPs having cancelled deals in their pipelines in recent months. GPs with dry powder are Investments Decline Across All Regions likely to accelerate deal pace over the coming months as they sense inflection points in their respective markets. The decline in both aggregate investment value and the total number of deals was pronounced across all regions in the first Based on Q1 data alone, the fundraising and investment pace three months of 2009. Emerging Asia saw a 66% decline in total appears to resemble 2005, when emerging markets private investment value, from US$9.8 billion in Q1 2008 to US$3.4 equity saw US$25.8 billion raised and US$12.1 billion invested billion in Q1 2009. Investment value fell 75% in Africa and 64% during the full-year. in the CEE/CIS region. The Latin America/Caribbean region saw the most significant decline in investment value at 94%, down EMPEA will release fundraising and investment totals for the from US$1.5 billion in Q1 2008 to US$100 million in Q1 2009. first half of 2009 early in the third quarter. ■

12 EM PE Quarterly Review Vol V Issue 2, Q2 2009 5214 India FP ad.qxd:Layout 1 11/6/09 17:26 Page 1

p Re la g Se ce ist e p b r sa te e y mb fo o v re u e r $ e 4 3 r t 4 t h 5 o THE PRIVATE EQUITY INTERNATIONAL INDIA FORUM 2009 7-8 OCTOBER 2009 • THE TAJ MAHAL PALACE & TOWER, MUMBAI

THE ANNUAL MEETING FOR DOMESTIC AND INTERNATIONAL PRACTITIONERS

Welcome to the second annual India forum co-hosted by Co-host PEI Media and the Indian Venture Capital and Private Equity Association (IVCA), in conjunction with our global strategic partner, the Emerging Markets Private Equity Association (EMPEA).

Last year more than 350 senior level delegates joined us in Mumbai for the most influential and engaged private equity forum to take place in India. Global Strategic Partner This year promises to be even better with more LPs – both international and from the increasingly influential local institutional investor community - and new formats, including The Big Debate and the introduction of the latest interactive audience communication technology.

Some of the key players in the newly formed Indian government will be participating, alongside leading business entrepreneurs from across the financial industry as well as the cream of the local private equity industry.

For more information on the programme or sponsorship opportunities please contact Sharon Lim: +65 6838 4561 / [email protected]

To book your place contact Tereza: +44 (0) 20 7566 5445 / [email protected]

IVCA / EMPEA members are entitled to special rates, see www.peimedia.com/india09 for more information

- Institutional LPs attend for free* quote promotion code INDIALP09

Delegates at the 2008 forum

WE LOOK FORWARD TO SEEING YOU AT THE TAJ MAHAL PALACE & TOWER IN MUMBAI. WWW.PEIMEDIA.COM/INDIA09

* Institutional LPs including endowments, family offices, foundations, institutional investors, private/public pension funds, and university endowment funds will receive a complimentary pass to attend this event. Excludes fund of funds. Promo codes cannot be applied to existing registrations. Do not make any travel arrangements until we have confirmed your eligibility. Digging for Gold: Global Private Equity Reports You Should Read

If you are like most private equity professionals, you are deluged with information. Sorting out what you must read, should read and would like to read can often fill the entire time you have actually allocated to reading. With that in mind, the Research Team at EMPEA has culled reports for you, and herewith provides a short, recommended reading list to focus your valuable time. Of course, EMPEA publications are always a must read, but these other reports will also help keep you up to date on major trends, opportunities and challenges in the global private equity business.

Proposal for a Directive of the European Private Equity Monitoring Group on Parliament and of the Council on Transparency and Disclosure Update Alternative Investment Fund Managers Report and Amending Directives Source: The Walker Guidelines Monitoring Group Source: Commission of the European Communities Publication Date: April 2009 Publication Date: April 2009 Geographic Focus: United Kingdom Geographic Focus: Europe In November 2007, Sir David Walker, commissioned by the In response to the financial crisis, the European Commission British Private Equity and Venture Capital Association (BVCA), proposed controversial measures to regulate Alternative In- published Guidelines for Disclosure and Transparency in Pri- vestment Funds (AIF) in Europe at the end of April 2009. Part vate Equity, referred to as the Walker Guidelines. The Janu- of the controversy stems from the seemingly similar treat- ary and April 2009 compliance reviews reported a high level ment of very different alternative asset classes (e.g., hedge of support and commitment among industry participants to funds, private equity funds, venture capital funds). The pro- the Guidelines, suggesting an alternative approach to the Eu- posal aims for a unified regulatory environment to respond ropean Commission’s proposed regulation. Many British PE more adequately to perceived cross-border risks and to en- firms and global firms operating in the UK went beyond the courage the development of a single market in AIF by elimi- minimum requirements in supplying data, and some private nating barriers to the distribution of AIF products. The pro- equity-like members of BVCA participated, although not re- posal is not yet enforceable and will be sent to the European quired to do so. The April update reported that all 32 private Parliament and European Council for discussion and debate. equity firms reviewed completely conformed to the disclo- If it is approved by the end of 2009, it could come into law sures requirements. The Guidelines themselves, as well as as early as 2011. the most recent update, are an informative read in the wake of the current industry debate over regulation. Globalization of Alternative Investments: The Global Economic After the Darkest Hour, a New Dawn on Impact of Private Equity Report the Horizon: The Fourth Annual Survey of Financial Sponsors Source: The World Economic Forum Publication Date: January 2009 Source: Dow Jones Private Equity News Geographic Focus: Global Publication Date: February 2009 Geographic Focus: Global The World Economic Forum published their Globalization of Alternative Investments, Working Papers Volume 2: Global Private Equity News’ fourth annual survey of financial sponsors Economic Impact of Private Equity Report 2009 as a follow gauges the sentiment among industry stakeholders after the fallout on to the first volume published in January 2008. Whereas of the global financial crisis that has seemingly brought an end to the last Working Paper reviewed the demography of private the exponential growth of private equity firms witnessed from 2003 equity investments in the developed markets and their im- to 2007, the so-called “golden age” of the asset class. The survey pact on innovation, employment and corporate governance, was conducted from November 2008 to mid-January 2009. Partici- the current volume tries to expand on these topics by explor- pants in the survey included Private Equity News readers, who were ing the impact of private equity activity on management prac- invited to participate through an online questionnaire. While it may tices and labor productivity, as well as expanding the scope not be surprising to most readers that the survey results indicated of the study to the emerging markets. Despite the industry’s an end to the golden age of private equity, what makes this report recent negative press and government scrutiny for increased worth reading is the unexpected confidence in the new opportuni- regulation, this compilation of four studies reports overall ties that private equity has yet to capture. The survey revealed that positive findings about the industry. few out there believe a “dark age” has begun.

Continued on page 15

14 EM PE Quarterly Review Vol V Issue 2, Q2 2009 Digging for Gold, continued from page 14

Overview of the Brazilian Private Equity 2009 Industry Report: Latin American and Venture Capital Industry PE/VC Data, Markets and Trends

Source: GVcepe Center of Private Equity and Source: Latin American Venture Capital Association Venture Capital Studies at FGV-EAESP Publication Date: May 2009 Publication Date: December 2008 Geographic Focus: Latin America Geographic Focus: Brazil In its first regional survey of private equity and venture capital This is the second annual report by GVcepe, the private equity in Latin America, the Latin American Venture Capital Associa- center at Brazil’s leading business school Fundação Getulio tion (LAVCA) partnered with the Wharton School at the Univer- Vargas, and includes data from 121 of the 142 private equity sity of Pennsylvania as well as several local organizations and and venture capital organizations operating in the country as of development finance institutions. With the participation of 110 June 2008. Consequently, the report is a must-read for anyone active fund managers that reported fundraising, investment interested in the most complete coverage of the Brazilian mar- and exit activity in 2008 (representing greater than 95% of ket. The participating firms provided statistics on committed the largest global and local funds within the region), the 2009 capital, investor composition and portfolio companies, as well survey represents one of the most comprehensive reviews of as other important data points. The report will serve as the private capital investment in Latin America to date. LAVCA ad- basis for GVcepe’s 2009 Brazilian PE/VC Census and an up- ditionally administered an opinion survey of global institutional coming Economic Impact and Sustainability Study. GVcepe’s investors and conducted dozens of interviews with fund man- comprehensive analysis of Brazil provides much needed data agers and other market participants to provide greater color on on a rapidly growing market with noticeably increasing inves- the industry. Based on the survey, firms reported $4.6 billion in tor interest from around the globe. investments and $6.4 billion in fundraising activity for 2008.

Venture Capital and Private Equity Private Equity and Venture Capital in the Industry Performance Survey of South Middle East: Annual Report 2008 Africa Covering the 2008 Calendar Year Source: KPMG and Gulf Venture Source: KPMG and South African Venture Capital Association Capital Association Publication Date: February 2009 Publication Date: May 2009 Geographic Focus: Middle East Geographic Focus: South Africa Global accounting firm KPMG and the Gulf Venture Capital Global accounting firm KPMG and the South African Venture Association’s (GVCA) 2008 Middle East private equity report Capital Association’s (SAVCA) 2008 survey of the South Afri- is based on data sourced from Zawya’s Private Equity Monitor can private equity market includes information provided from and serves as an update to the 2007 report, providing complete more than 30 firms operating in the country. In addition to 2007 as well as 2008 year-end figures. Middle East and North industry data, the report also includes statistics on Black Eco- Africa (MENA) funds are included in the data unless investment nomic Empowerment’s (BEE) role in private equity activity. activity is solely focused in North Africa. The region has According to the report, investment in companies that are been experiencing tremendous growth in private equity with black-owned, empowered or influenced is up 38.1% from a compound annual growth rate of 30% from 2005 to 2008, 2007. The industry as a whole saw a 19.5% increase from according to KPMG and GVCA’s analysis. The report claims year-end 2007 to year-end 2008 for funds under management funds raised in 2008 increased to $6.4 billion from $5.8 billion and an 18.4% drop in investment activity. These results re- in 2007, while investment activity slowed, with 22% fewer veal a promising private equity market in South Africa that deals being completed in 2008 in comparison to 2007. These has shown relative resilience to the global economic crisis. trends are in line with other emerging market regions; however, This report precedes SAVCA’s economic impact assessment the report highlights the distinguishing features of Middle East survey due for release in August of this year. private equity including sector and country details. ■

EM PE Quarterly Review Vol V Issue 2, Q2 2009 15 11th Annual Global Private Equity Conference Washington, DC

The Emerging Markets Private Equity Association (EMPEA) and While opinions varied on the severity of the financial crisis and its the International Finance Corporation (IFC) hosted the 11th Annual impact on emerging markets private equity, there was a common Global Private Equity Conference on May 12th and 13th, 2009 in belief that the asset class will weather the current environment Washington, DC. A testament to the strength and resilience of given its maturation since the crises of the late 1990s. Survivors emerging markets private equity, the conference was the largest would represent the fund managers with the most durable strat- to date, with more than 700 registered delegates. The more than egies, ensuring the continued professionalization of the asset 100 speakers included global per- class. Comments spectives from Robert B. Zoellick, from one speaker President of the World Bank; Dr. seemed to sum up Arnab Barnerji, Non-executive Di- the mood, when he rector of the CDC Group; Richard described the indus- Haass, President of the Council try as transitioning on Foreign Relations; and Lars from “adolescence Thunell, Executive Vice-Present to adulthood.” De- and CEO of the IFC. The con- spite challenges— ference included a new half-day particularly in the seminar focused exclusively on areas of fundraising private equity in Africa, an event 1 and portfolio com- which featured PE professionals pany exits—emerg- active across the continent. ing markets private equity will not only survive current conditions, but emerge as an established asset class with its own unique characteristics. Surviving funds will have new investment opportunities at low company valuations, and the industry’s continuing focus on building portfolio compa- nies through growth capital rather than leverage is integral to its viability. ■

2 3 4 5

6 7

1. More than 700 global PE professionals attended the conference. 5. Richard Haass, President of the Council on Foreign Relations. 2. Left to right: Roger Leeds and Sarah E. Alexander of EMPEA and Erwin Roex of Coller 6. Attendees at networking sessions. Capital presented the results of the 2009 Limited Partner Survey. 7. Left to right: Mara Topping of White and Case, Panos Voutyritas of Kingdom Zephyr Africa 3. Robert B. Zoellick, President of the World Bank Group. Management Company, Yvonne Bakkum of FMO, Hurley Doddy of Emerging Capital Partners 4. Lars H. Thunell, EVP and CEO of the International Finance Corporation. and Papa Ndiaye of AFIG discussed where the best opportunities are for private equity in Africa.

16 EM PE Quarterly Review Vol V Issue 2, Q2 2009 Thanks to sponsors, exhibitors, media partners and supporting organizations Submit your news to [email protected]* Member News (*Details on the back of this publication)

Asia vest in mid-market funds in Asian emerging markets, particularly China and India, as well as other emerging markets, including Global Capital Management, a 100% subsidiary of Global Invest- sub-Saharan Africa. ment House, has generated a 70% internal rate of return on the sale of its stake in India-based Reliance Petroleum. The sale was IDFC Project Equity has acquired a 49% stake in two toll road made through Global Opportunistic Fund II, which is focused on the projects in India from Ashoka Buildcon for US$50 million. The Middle East and North Africa as well as India, China and Turkey. investment was made through the India Infrastructure Fund, which has raised US$875 million of its total target size of Mekong Capital has invested approximately US$9.4 million US$1.25 billion. into Masan Food Corporation, a leading manufacturer of sauces, noodles and condiments, through its Vietnam Azalea Fund. The CEE/CIS Vietnam Azalea Fund is a US$100 million fund focused primar- ily on making investments in Vietnamese companies at the pre- US-based private equity firm Warburg Pincus has acquired a 50% listing stage. stake in Romania-based real estate developer South Pacific Group. The deal is valued at approximately US$40 million. Citi Venture Capital International (CVCI) has partially exited its investment in Techno Electric & Engg Company, an India-based Russia-based private equity firm Quadriga Capital has acquired engineering, procurement and construction firm focused on the Russian business telephone directory publisher Euro-Address power sector. CVCI sold a 5% stake in Techno for approximately from TPG Capital. The acquisition was made through the US$140 US$4 million. million Quadriga Capital Russia Fund II, which invests in media, IT and telecom sectors. The Carlyle Group has invested US$20 million in Chinese women’s fashion house Ellassay. The investment was made by Carlyle Asia Finnish Fund for Industrial Cooperation (Finnfund), a Finland- Growth Partners (CAGP), which is currently investing out of the based private equity investor in developing countries, has commit- US$680 million Carlyle Asia Growth Partners III. The Carlyle Group is ted US$4 million to SEAF’s South Balkan Fund, bringing the fund’s also raising its second Asia real estate fund, Carlyle Asia Real Estate total size to approximately US$17 million. The South Balkan Fund Partners II, and is targeting total commitments of US$1 billion. focuses on investments in small and midsize enterprises in Serbia, Montenegro and Macedonia. US-based investment firm Small Enterprise Assistance Funds (SEAF) is in the process of raising a fund that will invest in agricul- German development finance institutionDEG has acquired a 25% ture-related businesses in India. The fund is targeting commitments stake in the bakery business of East Point Group in Serbia for totaling US$75 million. US$20 million. The capital provided by DEG will be invested in a new bakery production site in Belgrade and used to expand the Asian private equity firms Hupomone Capital Partners and AIF company’s retail operations. Capital will jointly invest US$40 million in Oceanus Group, a Singa- pore-based abalone producer. Hupomone will invest US$15 million Swiss private equity firm Alpha Associates is set to launch the Al- through its debut fund, which closed at US$100 million in March pha CIS Opportunity Fund, a fund of funds that will focus on invest- 2008. AIF Capital will invest US$25 million through its US$435 mil- ments in the Commonwealth of Independent States and Turkey. lion AIF Capital Asia III fund. In addition to commitments to new funds, the fund will invest in secondary interests in existing funds. The fund is targeting commit- AIF Capital has made a partial exit from its pre-IPO investment in ments totaling US$300 million. Yes Bank with an exit multiple of 5.8x. AIF sold 2.2 million shares out of the 15 million it originally bought in 2003. The deal was worth Horizon Capital’s portfolio company Glass Container Prim (GC approximately US$3.6 million. Prim) has secured a US$10 million six-year loan from the Black Sea Trade and Development Bank (BSTDB). GC Prim, a flint glass bottle Cambodia-based private equity firm Leopard Capital has closed the manufacturer based in Moldova, will use the loan to complete the Leopard Cambodia Fund with US$27 million in total commitments. The construction of a new factory with a production capacity of 140 mil- fund will invest in private companies and real estate in Cambodia. Tar- lion bottles per year. geted sectors include financial services, agriculture, food and beverage production, building materials, tourism and property development. Latin America

Private equity firm Navis Capital Partners has acquired a majority Aureos Capital’s Emerge Central America Growth Fund (EMERGE) stake in Indian education provider Edutech for US$30 million. The in- has invested in NiVa Euroequipos (NiVa), a Costa Rican company vestment was made through Navis V, which closed with more than that specialises in construction equipment rental. The investment US$1 billion in total commitments in 2007. was made through a convertible loan and represents the EMERGE fund’s fourth investment. IDFC Capital (Singapore) Pte Ltd, a private equity unit of In- dia’s Infrastructure Development Finance Co. (IDFC), is raising Southern Bridge Capital (SBC) is launching a new US$100-150 a US$500 million Asia-focused fund of funds. The fund will in- million private equity fund focusing on investments in middle class

Continued on page 19

18 EM PE Quarterly Review Vol V Issue 2, Q2 2009 Member News, continued from page 18 Submit your news to [email protected]* (*Details on the back of this publication) and affordable housing in Latin America. The fund will target new opportunities in Algeria, Egypt, Jordan, Lebanon, Morocco, the Pales- housing projects with a regional emphasis on Central America, the tinian Territories, Syria and Tunisia. Caribbean and the Andean region. Sub-Saharan Africa Advent International has acquired 30% of CETIP S.A.–Balcão Organizado de Ativos e Derivativos, the largest central depository The Health in Africa Fund, managed by Aureos Capital, held a for private fixed-income securities and over-the-counter (OTC) de- first close at US$57 million out of a total target size of US$100- rivatives in Latin America, from a number of local financial-market 120 million. The fund, created by the International Finance Cor- participants. The value of Advent’s investment was approximately poration (IFC), the African Development Bank, the Bill & Me- US$170.6 million, making it one of the largest private equity transac- linda Gates Foundation, and DEG, seeks to assist low-income tions in Brazil so far this year. Africans gain access to affordable, high-quality health services by investing in SMEs in sub-Saharan Africa. Darby Overseas Investments, the private equity arm of Franklin Templeton Investments, and Colombia bank Colpatria are preparing International Housing Solutions South Africa (IHS) in partner- to launch a fund to invest in transportation infrastructure projects in ship with Affordable Housing Company Holdings (AFHCO) has Colombia. The fund is targeting total commitments of US$300 mil- begun development of 400 new rental apartments in Johannes- lion. Darby Overseas Investments has also recently invested US$12 burg. IHS successfully launched its US$170 million South Africa million in Banco León, a leading Dominican Republic bank. Workforce Housing Fund late last year and this deal represents the first of several projects scheduled this year. MENA Africa-focused investment firm Kingdom Zephyr Africa Man- Egypt-based EFG Hermes, Caisse des Dépôts of France, Italy’s Cas- agement has acquired a 30% stake in South African power in- sa Depositi e Prestiti and Caisse de Dépôt et de Gestion of Morocco frastructure and heavy building materials company Buildworks have announced the launching of InfraMed, a fund that will invest for US$20 million. The investment was made through Kingdom primarily in greenfield projects to build urban, energy and transport Zephyr’s Pan-African Investment Partners II Fund. infrastructure in the Southern and Eastern Mediterranean region. The fund is targeting commitments of US$1.3 billion. CDC Group, the UK government-backed emerging markets-fo- cused private equity firm, is committing US$15 million to Sene- Citadel Capital, a private equity firm based in Egypt, and Sphinx gal-based Advanced Finance Investment Group’s debut fund. Private Equity Management, a subsidiary of Citadel, have launched The Atlantic Coast Regional Fund is targeting commitments total- a new fund that will invest in distressed assets in Egypt. The Sphinx ing US$150 million for investments in West and Central Africa. Turnaround Fund, with a final target of US$100 million in total com- mitments, held a first close at US$51.5 million. The International A consortium of investors, including Investec Asset Manage- Finance Corporation (IFC) and the European Investment Bank each ment and AKA Capital, participated in the management buyout committed US$17 million. of a 74% stake in African hotel group Protea Hospitality Corp. The investment was acquired from Australia’s Stella Hospitality Franklin Templeton Investments has increased its stake in Dubai-based Group. The value of the buyback was not disclosed. fund manager Algebra Capital to 40% as part of a strategy to increase its presence in the Middle East and North Africa. To date, Franklin Tem- Emerging Capital Partners (ECP), a private equity firm focused pleton and Algebra Capital have launched five MENA equity funds. on investing across the African continent, has acquired a minority stake in La Nouvelle Société Interafricaine d’Assurance Participa- Eastgate Capital Group, Investcorp and The National Investor tions SA (NSIA), an insurance group in French-speaking West and comprised a consortium of investors acquiring a 70% stake in Saudi Central Africa. The deal was valued at US$47.7 million. Arabia-based gold and jewelry manufacturer L’azurde. Eastgate’s investment, totaling US$40 million, was made through the MENA Overseas Private Investment Corporation (OPIC) and the Direct Equity Fund, which had a first closing at US$250 million and US Agency for International Development (USAID) will launch a is targeting total commitments of US$400-500 million. Investcorp US$2 million initiative utilizing OPIC’s Enterprise Development made its investment through the US$1.1 billion Gulf Opportunity Network (EDN) to provide technical assistance to small- and me- Fund I. dium-sized enterprises (SMEs) in sub-Saharan Africa. Abraaj Capital, a Dubai-based private equity firm, has acquired a stake of undisclosed size in Dubai-based publisher Mediaquest and Other has received Pakistani government approval to proceed with the ac- quisition of a controlling stake in Pakistan’s KES Power for US$361 The International Finance Corporation (IFC) has established a million. Abraaj is also raising a new fund that will seek investment subsidiary that will serve as a fund manager of third-party capital. opportunities in the Middle East, North Africa and South Asia. The IFC Asset Management Company will manage a new US$1 billion fund is targeting commitments totaling US$4 billion. private equity fund of funds that will allow national pension funds, sovereign funds, and other sovereign investors from IFC’s share- Capital Trust Group is set to hold the final closing of its EuroMena II holder countries to co-invest in IFC transactions in Africa, Latin Fund at approximately US$100 million. The fund will seek investment America and the Caribbean. ■

EM PE Quarterly Review Vol V Issue 2, Q2 2009 19 Submit news on funds launched & closed to [email protected]* Funds Launched & Closed (*Details on the back of this publication)

Funds Launched PE Firm Fund Name (Target Fund Size) Geographic Focus Alpha Associates Alpha CIS Opportunity Fund (US$300m) CIS Aurora Investment Advisors Aurora II Fund (US$80m) Russia Bahana TCW Investment Management Bahana BUMN Fund 1 (US$18m) Indonesia Beltone Private Equity, SIGEFI Private Beltone MidCap Fund (US$200m) Egypt, GCC Equity Darby Overseas Investments, Colpatria Darby Transportation Fund* (US$300m) Colombia Dragon Capital Europe Virgin Fund (US$100m) Ukraine, Moldova, Belarus EFG Hermes Inframed (US$1.3bn) SE Europe and N. Africa Energy Capital Enercap I Fund (US$500m) Peru First Vanguard Assets Ltd. China and Pacific Rim Water Infrastructure Fund* (US$500m) China IDFC Capital IDFC Asia Fund of Funds* (US$500m) Asia, Sub-Saharan Africa Macquarie Group Macquarie-SBI Infrastructure Fund (US$3bn) India Olympus Capital Asia Environmental Partners Fund (US$250m) China, India Small Enterprise Assistance Funds SEAF India Agribusiness Fund (US$75m) India (SEAF) Southern Bridge Capital Southern Bridge Housing Fund* (US$100m) Latin America Ventureast BYST Growth Fund (US$5m) India Zhejiang Government Zhejiang Venture Investment Guidance Fund (US$73m) China

Funds with Closes Funds Raised PE Firm Fund Name (Fund Size) Geographic Focus (Closes) Q12009 Abu Dhabi Investment Company, ADIC-UBS Infrastructure Fund I (US$600m) Middle East US$250m (First) UBS Global Asset Mgmt Aureos Capital Health in Africa Fund (US$100m) Sub-Saharan Africa US$57m (First) Capital Trust Group EuroMena II Fund (US$100m) MENA US$100m (Final) The Carlyle Group Carlyle MENA Partners (US$500m) MENA US$500m (Final) Citadel Capital, Sphinx Private Sphinx Turnaround Fund (US$100m) Egypt US$52m (First) Equity Management CTC Capital/CTC (Yangzhou) CTC (Yangzhou) Venture Cooperation Fund China US$44m (Final) Venture Cooperation (US$44m) CX Partners CX Partners Fund I (US$500m) India US$220m (First) Franklin Templeton Real Estate Franklin Templeton Asian Real Estate Fund Asia US$383m (Final) Advisors (US$383m) IGNIA IGNIA Fund I (US$75m) Latin America US$41m (First) Leopard Capital Leopard Cambodia Fund (US$27m) Cambodia US$27m (Final) Brazil, Russia, Siguler Guff & Company, LLC BRIC Opportunities Fund II (US$915m) US$915m (Final) India, China

* Exact fund name unknown.

20 EM PE Quarterly Review Vol V Issue 2, Q2 2009 Submit news on exits to [email protected]* Notable EM PE Exits & IPOs (*Details on the back of this publication)

Portfolio Private Equity Year of Capital Date Country Company Name Firm Name Sector Investment Invested of Exit Exit Return Brazil BR Malls Equity Shopping Malls 2006 Apr-09 Sale of two, respective International, GP 10% stakes Investimentos Brazil Faculdades UBS Pactual Education 2007 Apr-09 Strategic sale to DeVry Nordeste (Fanor) (now BTG Pactual) Inc. Bulgaria Uniqa Bulgaria Equest Insurance Apr-09 Strategic sale of Investments 21.2% stake to Uniqa Balkans International for EUR 15.2m China Chenzhou Mining Haitong Fortis Mining Apr-09 Share sale on Shenzhen Private Equity Fund Stock Exchange Management China China Dongxiang Morgan Stanley Retail 2006 Apr-09 Share sale of 3.6% Group Private Equity stake on Hong Kong Stock Exchange for US$73m China Little Sheep 3i Group Food & Beverage 2006 US$20m Mar-09 Sale of 11.3% stake China Wall Street The Carlyle Group Education 2005 Apr-09 Strategic sale to Pearson English for US$145m China Huiyuan Juice Warburg Pincus Food & Beverage 2006 Jun-09 Share sale Czech Marila Balirny Arca Capital Food & Beverage 2007 Mar-09 Strategic sale to the Republic Mokate Group India Mundra Port and 3i Group Ports 2006 US$50m Mar-09 Partial share sale Special Economic on Bombay Stock Zone (MPSEZ) Exchange for US$33m India Reliance Global Capital Oil & Gas Apr-09 1.84x; Petroleum Limited Management 70% IRR India ABG Shipyard IL&FS Investment Shipping 2005 US$7.2m May-09 Partial share sale of a Managers .5% stake on Bombay Stock Exchange for US$.78m India IBN18 Broadcast IL&FS Investment Media 2006 US$10.1m Jun-09 Partial share sale of Managers 2.09% stake on Bombay Stock Exchange for US$7.1m India Yes Bank AIF Capital Banking 2003 US$4.6m May-09 Partial share sale 5.8x on Bombay Stock Exchange for US$3.6m Poland Mobile Penta Investments Telecommunications 2006 May-09 Strategic Sale to Enertainment MoCoHub Technology Company/ Development S.A. Mobilking Russia Russian Alcohol Lion Capital Food & Beverage 2008 Apr-09 Strategic sale to Central Group European Distribution Corporation for US$380m Singapore Franklin Offshore 3i Group Marine 2007 Mar-09 Strategic sale International Infrasrtucture South Korea Yonghyun Base H&Q Asia Pacific Materials Apr-09 Share sale on KOSDAQ Materials for US$35m South Korea Melfas STIC Investments Technology 2006 May-09 Strategic Sale 6.3x; 72% IRR Ukraine ProCredit Bank Horizon Capital Banking Apr-09 Sale of 20% stake Vietnam Binh Chanh VinaCapital Construction Mar-09 IPO on Ho Chi Minh Construction Stock Exchange Investment Joint Stock Company Vietnam Phu Nhuan Mekong Capital, Retail 2008 US$20m Mar-09 IPO on Ho Chi Minh Jewelry (PNJ) VinaCapital Stock Exchange

EM PE Quarterly Review Vol V Issue 2, Q2 2009 21 EMPEA Members as of June 2009

Premier Members Abraaj Capital Limited* Citadel Capital Export Development Norton Rose* Abu Dhabi Investment Clearwater Capital Partners* Canada* O’Melveny & Myers LLP Authority Clifford Chance LLP* FMO- Netherlands Orrick, Herrington & Sutcliffe Development Company* Actis* Conduit Capital Partners LLP Advent International* LLC* Global Capital Management Quilvest* Ltd. * AIG Capital Partners, Inc. * Debevoise & Plimpton LLP* Shearman & Sterling LLP Global Environment Fund * Akin Gump Strauss Hauer & DEG* SHUAA Partners* GP Investments* Feld LLP* Delta Private Equity SIFEM* HarbourVest Partners, LLC Alfa Capital Partners Partners* SigmaBleyzer* Hony Capital Asian Development Bank * Denham Capital Siguler Guff & Company Baring Private Equity Asia Management LP ICICI Venture Funds LLC* Management Company* Ltd* Development Bank of SJ Berwin* Southern Africa IDFC Private Equity* Baring Vostok Capital Standard Bank Private Equity Partners* Dubai International Capital IL&FS Investment Managers SVG Advisers Limited* Capital International Private EFG-Hermes Private Equity* Ltd. * Swicorp* Equity Funds (CIPEF) * Emerging Capital Partners* International Finance Warburg Pincus International Capital MS&L Corporation* EMP Global* LLC* Japan Bank for International The Carlyle Group* Ethos Private Equity Ltd* Cooperation (JBIC) White & Case LLP* CDC Group plc* Eton Park Capital Kohlberg Kravis Roberts & Zephyr Management, LP* China New Enterprise Management* Co. Investment European Investment Bank*

* EMPEA’s founding Charter Members.

Full Members

7L Capital Advisors Ltd. Aureos Capital Limited Confrapar Participações e Finlombarda Gestioni SGR SpA AB Capital Avigo Capital Partners Pesquisas S/A FIR CAPITAL Partners Ltda. Absa Capital Equity Investments Axxess Capital Cordiant Capital Foursan Group ACCION Gateway Family of Baird Asia Advisors Ltd. CRG Capital, LLC Frontier Investment & Funds Baninfo Capital Darby Overseas Investments Development Partners Ltd. Advanced Finance and Blue River Capital Gávea Investimentos Investment Group Development Partners Brait Private Equity GIMV NV African Capital Alliance International BTS Investment Advisors Great Circle Capital LLC AIC International Investments Discovery Americas Capital Capital Invest GrowthGate Capital Corporation Ltd. Partners Capital Trust SA HBG Holdings AIF Capital East Africa Capital Partners Capitalworks Equity Partners Henderson Equity Partners Albright Capital Management Eastgate Capital Group (Pty) Ltd. Horizon Capital LLC Emerging Energy & Cartica Capital Horizon Equity Partners Algebra Capital Environment LLC Centras Capital Ltd. Hupomone Capital Partners Alothon Group Environmental Investment CICapital Private Equity Partners & CWP Singapore Pte Ltd. Alta Growth Capital CIMB Standard Strategic Asset Eurasia Capital Management I&P Management (Indian Artesia Capital Management Ocean) Ltd. Advisors Evolvence India Life Science Asia Mezzanine Capital Advisers Citi Venture Capital International Fund Icentis Capital Ltd. CoInvest SA EVU Management Ltd. IDFC Project Equity Co. Ltd. Asian Tiger Capital Partners

Continued on page 23

22 EM PE Quarterly Review Vol V Issue 2, Q2 2009 EMPEA Members, continued from page 22

International Housing Solutions Mekong Capital, Ltd Rio Bravo Investments Ltd Susquehanna Capital Investec Asset Management National Venture Capital LLC The Rohatyn Group (TRG) Templeton Asset Management Ithmaar Bank B.S.C. Navis Capital Partners Limited Management LP TMG Capital JS Private Equity Nine Rivers Capital Shoreline Capital Management Trans-Century Limited Kingdom Zephyr Africa Management Ltd. SkyBridge Global Partners Travant Capital Partners Management NSG Capital Administracao de Small Enterprise Assistance Tuninvest Finance Group Recursos S.A. Funds Leopard Capital Ltd. UFG Private Equity Och-Ziff Capital Management Soar Management, Inc. Lereko Metier Capital Growth Venture Capital Trust Fund Fund Group Société Générale Asset Venture Investment Partners Paladin Realty Partners, LLC Management Alternative Lighthouse Funds Bangladesh Pan African Capital Group, LLC Investments Lombard Investments Venture Partners Botswana Poteza Partners South Asian Real Estate Limited Madagascar Development Wamex Private Equity Mgmt. Partners LLC QInvest Southern Bridge Capital Wolfensohn Capital Partners Marshall Fund Quadriga Capital Russia Stratus Group Zephyr Peacock Fund I

*Full members include private equity fund managers.

Associate Members

Adams Street Partners Corporación Mexicana de IDI Emerging Markets Paul Capital Partners Alberta Investment Inversiones de Capital Jefferies Helix PCGI Management Corporation Corporate Connect BV K2 Investimentos PE Consulting Investintoindia Alpha Associates Denning and Company LLC KfW IPEX – Bank GmbH Private Ltd. AlpInvest Partners N.V. EMAlternatives LLC Kusuntu Partners Rensselaer Polytechnic Institute Amanda Capital Plc Emerisk SA Liberty Global Capital Services Robeco Private Equity ANBID – Associação Nacional European Bank for Magog & Cie Ltd. SAVCA dos Bancos de Investimento Reconstruction and Middleland Capital Squadron Capital Asia Alternatives Advisor Development Milbridge Capital Management SVB Capital Axonia Partners Finnish Fund for Industrial MontaRosa LLC Teacher Retirement System of Azerbaijan Investment Cooperation Texas Morgan Stanley Alternative Company First Avenue Partners LLP Investment Partners Technoserve Barnellan Equity Advice Ltd. Georgetown University MVision Private Equity Advisors Thunderbird Private Equity C.P. Eaton Partners, LLC Investment Office Center National Council for Social Global Strategies Group Caísse de depot et placement Security Fund P.R.C. TozziniFreire Advogados du Québec Goldman Sachs Natixis Private Equity Tufts University Investment CalSTRS The Gutmann Group International Management Office Cambridge Associates Hamilton Lane New Market Venture UMWA Health & Retirement Campbell Lutyens & Co. Ltd. Howard Hughes Medical Management LLC Funds Canada Pension Plan Institute Northgate Capital Value Enhancement International Investment Board Hunton & Williams LLP OMERS Private Equity World Bank Pension Plan Coller Capital IDFC Capital (Singapore) Pte Overseas Private Investment Commonfund Capital Ltd. Corporation XT Capital Partners

*Associate members include limited partners, fund of funds, service providers and other organizations.

EM PE Quarterly Review Vol V Issue 2, Q2 2009 23 Featured Events EMPEA Industry

The Private Equity International India AVCJ ‘s Asian Private Equity & Venture Malaysian Capital Markets Forum 2009 Forum/USA 2009 Shangri-la Hotel, Malaysia The Taj Mahal Palace & Tower Hotel, Harvard Club, New York City 7-8 October 2009 Mumbai 9 July 2009 http://www.ifrconferences.com 7-8 October 2009 http://www.avcj.com (15% discount for EMPEA members) http://www.peimedia.com/india09 Private Equity Analyst Conference Limited Partners Summit West Emerging Markets Private Equity New York, NY San Mateo, CA Forum London 16-17 September 2009 3-4 November 2009 Merchant Taylor’s Hall, London http://peaconference.dowjones.com http://lpsummitwest.dowjones.com 3-4 November 2009 (15% discount for EMPEA members) (15% discount for EMPEA members) http://www.peimedia.com/emlon09 Asia Refinancing and Restructuring Summit Shangri-la Hotel, Hong Kong 28-29 September 2009 http://www.ifrconferences.com (15% discount for EMPEA members)

Submit Your News Information for EMPEA Member News, Funds Launched & Closed and Exits is compiled from submissions to EMPEA and from a range of publicly-available news sources. We encourage firms to submit their information to EMPEA on a regular basis for possible inclusion in the Quarterly Review and to ensure the accuracy of individual firms’ fundraising, investment and exit information in EMPEA’s global emerging market statistics. For more information on how to include your news, or to submit information, please email us at [email protected]. 5214 Emerging Markets 190x114.qxd:Layout 3 10/6/09 16:48 Page 1

The Emerging Markets Co-hosted by: Private Equity Forum

3-4 November 2009 – Merchant Taylors' Hall, London

PEI and EMPEA are delighted to announce the launch of their fifth annual Emerging For further information about the event, Markets Private Equity Forum which will take place in London on 3-4 November 2009. please visit the forum website: The longest-running forum dedicated to meeting the needs of those who invest in www.peimedia.com/emlon09 emerging markets private equity across the globe will once again bring together the or contact Colm Gilmore: highest concentration of leading investors and fund managers involved in this sector. Email: [email protected] Tel: +44 (0)20 7566 5447 “I meet new and interesting people every year at the Emerging Markets Forum – investors, new fund managers, exciting companies…PEI and EMPEA always bring together a great selection of senior level delegates. The speakers are interesting, topical and well-informed and they address subjects that matter to everyone involved in investing in emerging markets.” Jonathon Bond, Partner – Fund raising and investor relations, Actis

As always, EMPEA members will receive a 15% discount

off the full delegate rate and institutional investors may Delegates at the 2008 forum attend the event for free* (including the exclusive, invitation-only LP breakfast). 3-4 November SAVE THE DATE!

* Institutional LPs including endowments, family offices, foundations, institutional investors, private/public pension funds, and university endowment funds will receive a complimentary pass to attend this event. Excludes fund of funds. Promo codes cannot be applied to existing registrations. Do not make any travel arrangements until we have www.peimedia.com/emlon09 confirmed your eligibility.

24 EM PE Quarterly Review Vol V Issue 2, Q2 2009