Buyout investors plan emerging markets push-study

* Buyout investors want to invest more in emerging markets

* Expect returns to outperform U.S. and Europe

* See emerging markets as less risky

By Simon Meads

LONDON, April 19 (BestGrowthStock) – More than half of private
equity investors plan to put more money in emerging markets,
expecting higher returns from deals in these economies than ones
in sluggish western markets, a survey found.

Some 57 percent of investors expect to increase allocations
to markets including China, India and Brazil over the next two
years, said a survey released on Monday by private equity firm
Coller Capital and the Emerging Markets Private Equity
Association (EMPEA).

“Investors are clearly drawn to markets with strong
underlying growth, which trumps leverage in driving returns,”
said EMPEA President and Chief Executive Sarah Alexander.

Advent International last week said it had raised $1.65
billion for deals in Latin America, and Carlyle [CYL.UL] said it
had raised $2.55 billion for Asian investments, bucking tough
fundraising conditions to beat previous fund sizes.

Many investors see emerging market investments outperforming
European and U.S. markets. Over three quarters expect emerging
market net returns to exceed 16 percent over a three- to
five-year period, compared with 29 percent seeing similar
returns from their global portfolio, the survey found.

“In a number of these markets, particularly China, India and
Brazil, the environment has changed; there’s more stability,
there’s better governance, there are more factors allowing for
those returns to be generated,” said Coller partner Erwin Roex.

A fifth of investors expect emerging markets net returns to
exceed 25 percent, a figure in keeping with returns from
European and U.S. buyout firms during the buyout boom.

“Over the long term, markets which are growing at 7, 8, 9
percent are going to provide a more exciting environment for
outperformance,” said Richard Laing, chief executive of British
Government-backed emerging markets investor CDC Group.

As Western economies edge back into growth, China last week
posted stronger than expected annual growth of 11.9 percent in
the first quarter. India, meanwhile, is expected to grow 8.5
percent in the current fiscal year.

CDC Group, which reports its full-year results on Tuesday,
has seen performance rebound in 2009, Laing said. The group’s
portfolio lost 13 percent of its value in 2008 as company
valuations fell.

While perceptions of better returns are pushing investors
into emerging markets, they also now realise that det-laden
deals in Western markets carried higher risks than previously
assumed, Roex said.
Penny Stocks

(Editing by Greg Mahlich)

Buyout investors plan emerging markets push-study