Private equity looks to new markets: JPMorgan

By Olesya Dmitracova

LONDON (Reuters) - Financial sponsors are looking further afield for deals as demand for leveraged loan debt slows in Europe and the United States in the wake of the global credit crunch.

"People are taking this time to look more into new geographies," Karen Simon, JPMorgan Chase & Co's (JPM.N: Quote, Profile, Research, Stock Buzz) head of financial sponsors for Europe, Middle East, Africa and Asia, told the Reuters Hedge Funds and Private Equity Summit in London on Tuesday.

"They (financial sponsors) are trying to figure out how to be more creative," she said.

Simon noted recent deals by U.S.-based buyout fund TPG Capital and European private equity firm BC Partners.

On Monday, the chief executive of Russian pharmaceutical distributor CIA International said TPG had agreed to buy a 50 percent stake in the company for $800 million.

In February BC Partners agreed to buy a 50.8 percent stake in Turkish retailer Migros.

Emerging market private equity funds raised a record $59 billion in new capital last year, a 78 percent increase over 2006, according to the Emerging Markets Private Equity Association.

Almost half the fresh capital raised went to commitments in emerging Asia, the industry body said.

"With respect to Asia, people are looking a lot in the growth markets, primarily focusing on China, where it's more of a minority-stake market, (in) India, there have been a few minority stakes done," Simon said.

Private equity optimism about emerging markets is not turning into a bubble, she said.

"If you look at the overall levels of activity, people are still putting a toe in the water. You have to be brave to step in there on some of these investments."

"I think opportunities are still relatively rare."

But investors are seizing the opportunities they do see.

HSBC Halbis Capital Management told the Reuters summit on Monday that it planned to launch a long-short India mid-cap hedge fund and that it wanted to start more emerging market-focused funds to take advantage of these economies' growing importance.

JPMorgan continues to hire in Russia and other emerging markets, Simon said.

(Editing by Jason Neely)