More exits, as corporate buyers return to M&A markets and IPOs recover, have increased the flow of capital back to limited partnerships and private equity has shown good returns even from the depths of the cycle.
China doesn't ban something
With renewed confidence and increased liquidity generated from profitable exits, capital is flowing back into private equity once more. Some emerging and developed markets offer opportunities, but caution is needed when selecting deals.
The private equity industry’s history in China is littered with well-documented issues: a large number of fairly new private equity managers, high prices paid for recent investments, and a frequent lack of transparency and corporate governance. An end to a 14-month ban on IPOs in China was announced at the end of November by China’s securities regulator, and new listings could resume as early as this month. Maintaining a balanced long-term investment approach and navigating the market with trusted GPs remain critical.
Move away from Spanish speakers
South-East Asia has followed China’s template of increased private equity activity and higher valuations. Once prices start to dip, the market will yield more attractive private equity deals again; strong fundamentals and an attractive consumer growth story make for a compelling opportunity in South-East Asia private equity over the long-run in our view.
It’s a similar story in Latin America. Our view of last year, which was to favour Spanish-speaking countries including Mexico, Colombia, Chile and Peru has proven correct, as they have outperformed Brazil.
However, prices are beginning to weaken in Brazil as international interest cools, and we see more attractive opportunities to invest there compared to a year ago.
