Pe Development

With the PE Industry booming there has been an unprecedented upsurge in the funds being raised and invested in the private equity industry, with more and more PE firms amass in the PE industry, all are going with the saying "Make hay while the sun shines", but it raises a question "How long the sun is going to shine".

US dominating the PE industry with Ј152.07 billion PE funds raised in 2006 almost six times it raised in 2003 Ј24.31 billion, UK following next with Ј33.64 billion funds raised, over five folds from Ј0.97 billion in 2003. UK the strongest economy of Europe rose more than the whole of Europe Ј23.97 billion (excluding UK). As US and UK are developed economies, the main focus of the PE firms is on the Emerging Markets (Read Asia, Russia, Middle East, central and Eastern Europe, Latin America and Africa) as the EM gets the PE firms more returns than the developed economies, with an expected return of 25%-30%, so there have been an enormous PE investment in the EM. Some firms also stated the returns have exceeded their expectations.

Going with the figures given by EMPEA (Emerging Market Private Equity Association) the funds raised in the EM through Aug'07 is US$ 29 billion comparing to a total of US$ 33.2 billion in the year of 2006, of which US$ 19.4 billion being raised in Asia alone. The figures for 2003, 2004 and 2005 were US$ 3.5 billion, US$ 6.5 billion and US$ 25.8 billion respectively. There had been a five-fold increase in the investments in 2005 comparatively to 2004. Of the total funds raised Asia took 58% in which China and India taking a larger share.

PE investment in India surpassed China making it the top Asian destination (excluding Japan) for PE funds. With investment in India crossed US$ 10 billion between Jan'07 - Oct'07 compared to US$ 8.3 billion invested in China in the same period. Where as China was leading with an investment of US$ 13 billion received in 2006 with India receiving US$ 7 billion, as reported by the investment advisory firm Indus