Franklin Templeton has held a final close on its fourth emerging markets private equity fund at $220 million, missing its target and reflecting reduced EM PE fundraising levels.
Templeton Strategic Emerging Markets Fund IV launched in 2012 with a target of $300 million. It was designed with a sub-tranche for Asia, of which about one-third would be earmarked for China, with the rest targeting Southeast Asia and India. The fund can also invest in Central and Eastern Europe.
It is the follow-on vehicle to Fund III, which raised $180 million. Predecessor Funds I and II each closed at $110 million.
The shortfall for Fund IV is in line with trend of lower inflows to EM private equity vehicles, which raised a total of $36 billion in 2013 across 150 funds, according to the Emerging Markets Private Equity Association (EMPA). That represents a 19% decrease in capital-raising from 2012 and comes alongside outflows from EMs starting from mid-last year.
When asked the possible reasons for the shortfall, and information about the Fund’s IV’s investors, Franklin Templeton told AsianInvestor that it could not comment by press deadline.
In a release, the firm says Fund IV has already made three deals totalling $59 million, including a $33.5 million investment in Sok Marketler Ticaret, one of Turkey’s largest discount food retailers.
The fund has also reportedly invested in Delhi-based liquor producer Globus Spirits and Tongda Group, a Chinese manufacturer of high-precision components used in consumer electronics.
While PE flows to EMs slowed last year, deal activity by general partners picked up, particularly in Southeast Asia where $2.2 billion was invested through 61 deals – a 39% increase in capital deployment from 2012.
Fund IV is managed by a team led by Mark Mobius, executive chairman of Templeton Emerging Markets Group.
Mobius, one of the most high-profile investors in emerging markets, maintains his view that despite EM volatilty, it is still a highly attractive market for private equity, as “the long-term investment case hasn’t changed".