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Frost & Sullivan on Private Equity: Emerging Economies Offer Attractive Fund Raising Opportunities and Scope for Growth

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Frost & Sullivan on Private Equity: Emerging Economies Offer Attractive Fund Raising Opportunities and Scope for Growth PR Newswire LONDON, July 24, 2012 - Diversified financial and real estate funds continue to be attractive investments LONDON, July 24, 2012 /PRNewswire/ -- For the private equity sector, 2011 was a roller coaster year, with the first half retaining the momentum from 2010 and the second half being affected by the global economic scenario. Fears of a double dip recession and credit downgrades in the West had an impact on the private equity industry in terms of fund raising, deal activity and exits. However, diversified financial and real estate funds continue to be attractive investments with financial technology being the most interesting opportunity. Emerging economies also hold a strong potential. A new analysis from Frost & Sullivan on Private Equity and Venture Capital Investment Trends in the Financial Services Industry in E u r o p e reveals that private placements in the financial services sector in Europe declined 30 per cent in 2011 in comparison to 2010. The average deal size of the sector has decreased, which indicates a decline in investor confidence. "Last year banking and insurance witnessed a fall in private equity activity," says Frost & Sullivan Financial Analyst Sheetal Kothari (http://www.financialservices.frost.com).

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Frost & Sullivan on Private Equity: Emerging Economies Offer Attractive Fund Raising Opportunities and Scope for Growth
PR Newswire LONDON, July 24, 2012
- Diversified financial and real estate funds continue to be attractive investments LONDON,July 24, 2012/PRNewswire/ -- For the private equity sector, 2011 was a roller coaster year, with the first half retaining the momentum from 2010 and the second half being affected by the global economic scenario. Fears of a double dip recession and credit downgrades in the West had an impact on the private equity industry in terms of fund raising, deal activity and exits. However, diversified financial and real estate funds continue to be attractive investments with financial technology being the most interesting opportunity. Emerging economies also hold a strong potential. A new analysis from Frost & Sullivan onPrivate Equity and Venture Capital Investment Trends in the Financial Services Industry inEuropereveals that private placements in the financial services sector inEuropedeclined 30 per cent in 2011 in comparison to 2010. The average deal size of the sector has decreased, which indicates a decline in investor confidence. "Last year banking and insurance witnessed a fall in private equity activity," says Frost & Sullivan Financial Analyst Sheetal Kothari (http://www.financialservices.frost.com). "The average time taken to raise funds has also significantly increased by more than 80 per cent (11 months to 20 months) from 2006 to 2011. Additionally, there were fewer number of funds raised in 2011, compared to the fund raising cycle of 2005–2008. Due to sluggish growth and increasing risk in developed economies, fund raising will continue to be a challenge in 2012–2013." "With an unsustainable amount of dry powder funds, private equity firms are facing increasing pressure to use the money raised in the previous fund cycle," remarks Kothari. "However, distressed companies are reluctant to sell out during the current economic uncertainty because of problems regarding correct valuations of their companies." The trend regarding deal activity for private placements in the financial services sector mostly resembles that of the overall private equity market. Although there has been significant rebound in deal volume post the 2008 crisis, overall investments in financial services have been on a downward trend since 2008. "The reasons for the decline in activity are weak financial and capital markets, low investor confidence, credit downgrades and the Euro zone crisis, all of which have resulted in investors looking out for new avenues and other sectors for investment," comments Kothari. With many limited partners reassessing their current investment allocation in the private equity industry, it is becoming increasingly important for general partners to look beyond their usual sources of capital. Fund raising statistics for 2011 indicate thatAsiaand the rest of the world have