Download Analysis of Private Equity Experiences in Brazil & Mexico

Author:
Georgetown University
Washington, DC
United States

Article:
ANALYSIS OF PRIVATE EQUITY EXPERIENCES IN BRAZIL & MEXICO
A Report for Turkven Private Equity
Georgetown University
Internation Executive MBA Program

Prepared by:
Steve Holman
Maureen Kelly
Pablo Pezzimenti
Dan Polk
Ada Vaughan
Glenn Zirbser

INTRODUCTION

Preceding its advent in Turkey by about a decade, private equity has experienced a somewhat tumultuous history in Brazil and Mexico. From the great opportunities and rewarding successes as well as the challenging obstacles and crushing (and sometimes avoidable) failures encountered in these Latin American countries, private equity investors in other emerging markets, especially Turkey, can learn valuable lessons.

Turkven Private Equity has requested from the Georgetown University IEMBA team a report describing the private equity experiences of Brazil and Mexico. Over the past six months, the Georgetown team of six executive MBA students has collected, analyzed and discussed a wide variety of information on the introduction of private equity to Brazil and Mexico. Research methods included review of publications and news, expert interviews, and an original qualitative survey.

An examination of comparable economic indicators across Brazil, Mexico and Turkey support’s Turkven’s contention that the Latin American counties may be valuable analogs. Recent improvements in the Turkish economy have brought annual inflation and interest rates close to the levels they were in Brazil and Mexico in the early 1990s when private equity was introduced there. Other indicators—such as net migration and gross private capital flows—suggest that Turkey may even be in a stronger position that either Brazil or Mexico was when initial PE activity began in those countries. Still, Turkey may have some reason for concern about the prospects for private equity’s success when some other comparable indicators are examined, such as government debt, foreign direct investment, and the corruption perception index. In general, however, the assessment of the economic indicators suggests that Turkey is well positioned for the arrival of private equity—at least vis-à-vis Brazil and Mexico when investors initiated private equity activity in those emerging markets.