“Private equity investors have long looked to four large emerging markets for big returns: Brazil, Russia, India, and China. But the BRICs today don’t quite fit the fast-growth that Goldman Sachs strategist Jim O’Neill described in the2001 paper that coined the widely used acronym.
With each BRIC economy in some sort of trouble, private equity firms are increasingly putting their investment dollars to work in other less-developed markets—especially Southeast Asia and Sub-Saharan Africa—in hopes of better returns.
Money invested in non-BRIC emerging markets increased 18 percent in 2013, reaching a five-year high of $11 billion and representing 44 percent of total capital invested in emerging markets, according to a recent study by theEmerging Markets Private Equity Association. At the same time, total capital invested in the BRICs declined 20 percent between 2012 and 2013 and was 38 percent lower than in 2011.
“Investors are certainly looking beyond the BRICs, acknowledging that consumer driven growth is accelerating most in these new markets,” said Aly Jeddy, partner at The Abraaj Group, a global private equity firm that runs $7.5 billion across more than 20 sector and country-specific funds. “Investors are increasingly as wary of BRICs hype as they are weary of the unattractive returns many of the funds in these markets have delivered.”
To be sure, the BRICs are still a force….”
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