Private Capital Investment Rises In Emerging Markets
New research by the Global Private Capital Association was released this month on private capital activity and trends in global markets.
Research by non-profit group GPCA shows that private capital deals for the first half of 2022 rose year-on-year in India, South East Asia, Latin America, Africa and the Middle East, compared with the previous year. It found that investors had been deploying capital in resilient sectors such as energy, digital infrastructure, IT, food and agribusinesses.
Nevertheless, private capital activity in China fell by 37 per cent, year-on-year, driven by the prolonged lockdowns that have affected the economic outlook, the firm added. Policy changes dating back to 2021 have also curbed VC and tech investing in particular. Tech deals in 1H 2022 were concentrated in sectors aligned with Beijing’s five-year plan, including semiconductors and hardware, electric vehicles and healthcare, the firm said.
Africa, the Middle East, India, Southeast Asia, Central and Eastern Europe were bright spots for VC activity, in particular, GPCA said, with VC investment up 80 per cent, compared with the first half of 2021.
In Central and Eastern Europe, VC investment hit a record high, but Q2 activity in the second quarter slowed as the war in Ukraine escalated. In Southeast Asia, venture capital investment climbed by as much as 92 per cent, year-on-year, the firm said.
Investment activity in green industries such as electric vehicles also continued to grow, no longer confined to first-mover countries like China, with notable big ticket deals in Croatia and India, GPCA stressed.
Private capital investments in food and agriculture have also increased since the start of the pandemic, the research shows.
Continued supply disruptions due to COVID-19 and the war in Ukraine are driving investment in local food producers and tech-enabled platforms in Asia and the Middle East, the firm added.
GPCA is a non-profit membership organisation, representing private capital investors including private equity and venture capital, who manage over $2 trillion in assets across India, Southeast Asia, Latin America, Africa, the Middle East, Central and Eastern Europe.