The private equity unit of the Capital Group Companies, which includes the American Funds, closed an emerging markets fund at its $3 billion limit, in a signal of investor appetite for exposure to these regions.
Capital International Private Equity Fund VI is larger than the prior fund that raised about $2.2 billion in 2007. Capital International Private Equity Funds, which has been investing in emerging markets since 1992, is benefiting from increased demand by global private equity investors.
Three-quarters of investors expect to increase their commitments to emerging markets over the next two years, according to a recent survey by the Washington-based Emerging Markets Private Equity Association.
Fund VI held a final close in March after it began raising money in December 2010, Jim McGuigan, a managing partner who handles investor relations, said in an interview. The new fund is expected to make 15 to 20 investments, which is similar to the number of investments made by prior funds. It will make a priority of about 16 of 138 emerging market countries, according to a statement.
The team looks at companies and people first in making investment decisions rather than targeting certain countries, said Koenraad Foulon, co-founder of CIPEF, in an interview. A “herd mentality” is an issue in emerging markets where most emphasis goes to China, India and Brazil and results in highly competitive markets, said Foulon.
Close to 20 percent of the fund has been committed, the company said in the statement. Investments include Eaton Towers, a telecom tower development company with projects across Africa, and the equipment and infrastructure affiliate of Larsen & Toubro Ltd. (LT), an engineering and construction company in India.
Investors in the fund include Ohio Public Employees Retirement System, Oregon Public Employees Retirement Fund and Pennsylvania Public School Employees’ Retirement System.
Capital International is a subsidiary of Capital Group International Inc.
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