Capital International raises $2.25bn fund

The captive arm of the emerging markets fund manager has tapped increasing demand to invest in emerging markets, nearly quadrupling the size of its previous fund and raising more than 60 percent from new investors.

The captive fund of Capital International, the emerging markets arm of Capital Group, one of the world’s largest investment managers, has raised a $2.25 billion (€1.44 billion) global private equity fund. It is the largest fund raised solely for investment in emerging markets this year.

Now leading global investors are recognising what used to be called the rest of the world is producing the best of the world.

Jim McGuigan

Capital International Private Equity Funds’ fifth private equity fund is nearly four times the size of its previous $618 million fund launched in 2004.

Jim McGuigan, a partner at Capital International, said: “This happened over a period of years it didn’t happen overnight, but in the last three or four years it became very apparent to us and investors around the world that this fund would require a larger amount of capital.

“Now leading global investors are recognising what used to be called the rest of the world is producing the best of the world.”

More than a quarter of the fund’s capital has been committed across six investments. These include investments in Arcos Dorados, the restaurant chain McDonald’s Latin American business, and Unimilk, the second largest dairy business in Russia and Ukraine.

More than 60 percent of investment came from new investors. Investors included Lockheed Martin Corporation Master Retirement Trust and Pennsylvania Public School Employees’ Retirement System, two pension funds. Various Middle Eastern, Japanese and other Asian institutional investors also committed.

MVision Private Equity Advisers was exclusive global placement agent and Debevoise & Plimpton was legal counsel.  

The substantially increased investment in the fund corresponds to a growing demand from limited partners to allocate to emerging markets. Nearly three quarters of limited partners expect to increase allocations to emerging markets private equity funds over the next three to five years, according to Emerging Markets Private Equity Association’s 2008 LP Survey.

Last week Baring Private Equity Asia raised a $1.515 billion fund triple the size of its third fund raised in 2006.