CIPEF closes emerging markets fund at $3b

Capital International Private Equity Fund VI (CIPEF VI) exceeded its $2.5 billion target by raising capital from more than 60 investors, such as the Ohio Public Employees Retirement System, Oregon Public Employees Retirement Fund and Pennsylvania Public School Employees' Retirement System.

Aside from these US-based LPs, CIPEF VI also received commitments from LPs across Asia and the Middle East - including several sovereign wealth funds - and Europe, with the help of placement agent MVision Private Equity Advisers. CIPEF VI was oversubscribed, thanks to securing commitments from more than 60 institutional investors. Around 90% of Capital International's re-upped for this latest fund, including Lockheed Martin Corporation Master Retirement Trust and fund-of-funds Portfolio Advisors. The minimum subscription from most LPs was $25 million, although there were a few exceptions. The fund will have a lifespan of 10 + 1 + 1 and the GP contribution was described as "considerably higher than 5%".

"Experience has shown us that Asia generally is obviously going to play a very important role in CIPEF VI," says James E. McGuigan, a private equity managing partner at Capital International. "China is the world's largest emerging market and our first investment from the fund was in India." Indeed, almost 20% of the capital raised has already been channeled into three transactions, one of which is L&T Financial, the equipment and infrastructure affiliate of India's largest private sector engineering and construction company, Larsen & Toubro.

The firm's investment team of 24 will make a total of 15-20 investments from the fund (or 4-5 per year), prioritizing 16 of the 138 emerging market countries in the world. When asked whether the carried interest would be paid on the fund as a whole or on a deal by deal basis, McGuigan said that CIPEF was favoring a "hybrid" between these two models. In Asia, it will invest in buyout and expansion deals - the latter having historically made up two-thirds of its investments - in China, India and Indonesia. "We're big believers of taking a step back and looking at the global EM universe on an opportunistic basis, which is what we've been doing for a long time," explains McGuigan. "We've done enough to know that the picking and choosing countries or even regions can be a little bit treacherous." Transactions commanding equity tickets of $100-300 million will be targeted, with CIPEF taking an equity stake of less than 50% in most cases. It will aim to invest alone rather than in concert with other PE firms.

CIPEF VI was structured by law firm Debevoise & Plimpton.

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• Topics
• Venture
• South Asia
• Greater China
• Southeast Asia
• Fundraising
• India
• China
• Indonesia
• Capital International
• Emerging Markets
• Fundraising