Ken Costa, the former chairman of Lazard Ltd.’s (LAZ:US) international unit, joined Developing Markets Capital Partners, a private equity firm set up by three former Goldman Sachs Group Inc. (GS:US) executives.
Costa, 62, has become the fifth partner at DMC, Chris Barter, one of the private-equity firm’s founders, said in an interview in Moscow yesterday. He joins Barter, Edward K. Eisler, a former co-head of Goldman’s global securities unit, Samuel Wisnia, former head of the firm’s global macro strats and structure, as well as Philippe Costeletos, who formerly ran TPG Capital’s European unit. Costa didn’t return an e-mail seeking comment.
Started earlier this year, DMC is yet to raise its first private equity fund. Moscow-based Baring Vostok this week raised $1.5 billion for the largest fund targeting Russia, prompting speculation of a revival in investor appetite for private equity funds targeting emerging markets. Russian funds attracted just $135 million in 2011, compared with $7.08 billion for Brazil and $16.6 billion for China, according to data compiled by the Washington-based Emerging Markets Private Equity Association.
“We are looking at investing in China, Russia, Southeast Asia, Turkey and sub-Saharan Africa,” Barter said. “There are huge synergies in investing across those regions and timing those markets appropriately. There are substantial emerging trade flows between those countries as we have seen between Russia and China and there are significant capital flows following those trade flows.”
Eisler is chief executive officer of the London-based firm, which has 20 personnel there and in other cities including Moscow, Barter said. He left New York-based Goldman Sachs this year after 19 years.
Under Barter, Goldman Sachs spent about $1 billion on 15 Russian private equity investments, which helped the firm to secure work advising on debt and stock offerings. The bank advised on internet firm Mail.ru Group Ltd.’s (MAIL) $912 million initial public offering in November 2010 after making an earlier investment in the company. It also acquired a stake in Tinkoff Credit Systems, a credit card issuer which plans to sell shares next year.
“Investors are looking for growth and it’s hard to imagine you are going to make a lot of return in economies that are shrinking or growing at 1 to 2 percent anaemically for the next three to five years,” Barter said.
Russia’s gross domestic product increased by 4 percent in the second quarter from the year-earlier period, less than President Vladimir Putin’s 6 percent medium-term goal. India expanded 5.5 percent while China grew by 7.6 percent. Growth is weakening in developed countries like the U.S., where the economy expanded by 1.7 percent in the second quarter from the year earlier period, less than the 2 percent increase in the first quarter.
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