LAVCA « The Latin American Venture Capital Association

Private Equity in Latin America

published by Editor on February 21st, 2012

Tags: LAVCA, Private Equity, Risk management, Trends

Ocotober 2011 — With an improving political and regulatory framework and a positive economic outlook, Latin America is fast-becoming an attractive environment for private equity investment. With over $17bn worth of private equity deals closed in 2010 – five times the previous year – and greater results expected for 2011, the future looks bright, though there are, of course, challenges to making successful investments. The diversity of the region makes market knowledge and an extensive local network key factors in dealmaking. For PE firms looking to enter the market, forewarned is forearmed.

Untapped potential

Decades of subdued growth, elevated inflation, and political instability have been reversed in recent years as far-reaching structural reforms have improved economic prosperity and generated sustained growth. GDP growth of 6.1 percent in 2010, year on year, saw the region post the second strongest growth rate globally, surpassed only by emerging Asia. Goldman Sachs expects the region to generate GDP of $5.3 trillion in 2011. Furthermore, sound fiscal and monetary policies coupled with a strengthened regulatory framework have helped to boost sovereign credit ratings across the region.

It is of little surprise then that Latin America is fast becoming one of the most sought-after regions for private equity, as limited partners and general partners alike recognise its untapped potential. Following a slump during the hardest years of the financial crisis, investment activity surged. According to the Latin American Venture Capital Association (LAVCA), in 2010 PE investment in the region reached $7.2bn – an increase of 120 percent over 2009 and 57 percent over 2008. In a similar vein, the amount of capital generated from exits grew almost 100 percent in 2010 compared with 2009. In addition, transaction sizes have increased notably in deals conducted by PE groups.

This accelerating pace in investment is easily matched by fundraising activity. Fundraising by Latin America-focused PE funds reached a new record of $8.1bn in 2010, more than double the amount raised in 2009, according to LAVCA. PE groups have also achieved larger fund sizes. However, while fund managers are well capitalised and looking to make new investments, because asset prices have been driven up with so many bidders in the market, it may be a challenge to find attractive valuations.

In geographic terms, the deal environment is one of intense competition, particularly between the major players Brazil, Colombia, Mexico and Peru, while Argentina and El Salvador lag behind. That Brazil receives much of the attention from PE firms is no real surprise, seeing that the country has enjoyed an annual growth rate of 4.3 percent since 2003, and expects a rate of 5.8 percent for then next four years, according to the Brazilian Ministry of Finance. Brazil, then, is the powerhouse of the region. “It is noteworthy that most of the capital invested during 2009 and 2010 was in Brazil, which accounted for 72 percent of the total capital invested during that period,” explains Alfredo Alfaro, managing partner for Latin America at Advent International PE Advisors, S.C. “This was followed by Mexico and Colombia, which each accounted for 6 percent of the total funds invested in the region, according to the 2011 LAVCA Industry Data report. Activity in the region has tended to concentrate on growing industries such as healthcare, energy, technology and education. These sectors, combined, attracted more than 60 percent of investment dollars during 2010 and a similar percentage in 2009.” These areas present attractive investment opportunities due largely to strong internal demand; however the region’s growing economic prosperity and stability have also boosted demand in consumer-related products.

The Economic Commission for Latin America and the Caribbean (ECLAC) has observed that in the past 15 years, 56 million Latin Americans have joined the middle classes. Moreover, in 2010 more than 50 percent of the continent’s population was below the age of 30 and nearly 50 million people are estimated to join the economically active population by 2020.

The booming middle class has seen a surge in the consumption of non-essential goods, and placed great demand on the leisure industry. Demand for consumer-related products such as accommodation, cars, and watches is only expected to rise. A report by the global private market investment firm Partner’s Group notes that 52 percent of Brazil’s GDP is generated in consumer related sectors. However, just 14 percent of all public market equity is allocated to this sector, with an emphasis on volatile commodity companies and financials. This pattern is one seen across the region, and, in the absence of public equity, PE players are offered great exposure to the consumer sector, which they can capitalise upon for long-term growth. The region has already seen a great number of deals in retailing and restaurant chains, including investments in Fogo de Chao, Scarlat and Taco Holding. IT and online companies have also seen increased PE investment, where examples include a new round for Brazilian deal-a-day site Peixe Urbano, and software/BPO related investments in Certisign, Sascar Tecnologia and ALOG data centres. PE investments in the consumer sector look set to continue along with the region’s growth. Indeed, PE firms may well find it difficult to keep up with the region’s rate of expansion.

Attractive opportunities also exist in the infrastructure sector, where rapid economic growth is straining the capacity of roads, railways, ports and airports, making increased investment a priority. “There is a keen awareness within the public and private sector in Latin America of LAVCA,” says Cate Ambrose, president and executive director of the LAVCA. “However, despite abundant available capital for this sector there have been significant delays in seeing new projects realised. This is typically attributed to slow bureaucracy and regulatory processes. Nonetheless, there have been new deals realised in 2011, notably a major port container deal in Brazil by Advent International.” Investment into Brazil is made all the more urgent with the country due to host the FIFA World Cup in 2014 and the Summer Olympic Games in 2016.

The country will need to invest heavily in everything from stadiums and hotels to highways and airports to accommodate the expected crowds. Major projects include a high-speed railway between São Paulo and Rio de Janeiro, a hydroelectric power station and numerous road projects. JPMorgan Brazil Investment Trust estimates that infrastructure spending for the two events could hit $50bn by 2014. Such commitments make it likely that the government will rely on private investment to a much greater extent in the coming years.

Attractive environment

Various incentives and policies have been implemented to actively welcome foreign private equity into the region. Brazil’s government, for instance, has reduced the financial transactions tax (IOF), set at 6 percent in October 2010, to 2 percent with the specific intention of attracting PE investors. The higher rate has been kept in place for short term speculative flows into liquid assets. Authorities across the region are taking care to iron out country-specific obstacles to investment. In Colombia, the aggressive promotion of minority shareholder rights has supported the case for private equity investing. Ranking fifth-highest for investor protection on the World Bank’s ‘Doing Business Index’, the country surpasses the UK, and is equal to the US.

Across Latin America, authorities are doing their utmost to entice PE players, tackling long-standing preconceptions of the region. “In Mexico regulators are beginning to take a more aggressive stance to combat monopolies in key sectors for investment such as telecommunications and media, which would create important opportunities for PE investors,” Ms Ambrose says. “In Peru, it was feared that the new government would reverse market and investor-friendly policies, but it now appears that the president is aiming to assure investors that Peru will continue to welcome foreign capital and project private interests.”

A number of factors, then, have converged to make Latin America a more favourable investment destination. There has been an improvement in corporate governance and financial reporting transparency. Capital inflows are driving up the value of local currencies, and governments are committed to protecting local currencies from overvaluation, which in turn protects exports. Financial systems in the region are well-capitalised. In addition, local pension funds which, until recently, were largely restricted from investing in PE funds are playing an increasingly important role in the PE sector and in creating a secondary market.

Overall, Latin America is now seen as a much more secure investment target. “The risk perception of Latin America has improved in the past 20 months, with credit default swap spreads declining during this period, giving the region a better risk-reward profile,” says Mr Alfaro. “Latin American countries are also being recognised for their stable regulatory environments. For example, the 2011 edition of the LAVCA Scorecard on the Private Equity and Venture Capital Environment in Latin America gives high rankings to countries like Brazil, Chile and Mexico, not far behind traditional, popular PE markets such as the UK.”

Future trends

With foreign investors eager to tap into the opportunities offered by Latin America, what can we expect to see going into 2012 and beyond? Many global firms have opened offices in the region in the past year, or formed partnerships with local firms to access deal flow. Those investment teams are now focusing on deploying capital, and it is expected that this could herald an increase in the number and size of deals in 2011 as compared to 2010. Record fundraising is also predicted for the region this year. “Approximately $5bn was raised by four firms in Brazil in the first half of the year, as compared to the $8.1bn raised for all of Latin America in 2010,” explains Ms Ambrose, though she admits, this may not be a sustainable trend. “It is difficult to predict how long this cycle of increasing fundraising and investments will last. Today global institutional investors are keen to gain exposure in Latin America and there seems to be somewhat of a herd mentality that is contributing to the heated environment in the region. Once that demand cools down we may see a levelling off, which I think many fund managers would welcome.”

PE investments in Latin America will continue to have a high potential for attractive returns as countries carry on expanding at a fast pace, Mr Alfaro suggests. “Investors will seek to diversify from traditional PE markets in North America and Europe. Investors’ enthusiasm for PE investments in Latin America is already translating into fund commitments. The challenge is not whether enough private equity capital will be provided, but whether Latin America will be able to absorb the amount of funds that limited partners want to invest in the region without the risk of overhang and increased valuations.”

Risk management

Latin America is likely to remain a major focus of global economic growth and investors should allocate a proportionate share of funds to this growing market. However, investments in the region are not without risk. The political environment in emerging markets can be volatile, particularly in times of political power shifts. Though there has been impressive progress, corruption in these countries is still perceived as a risk. Red tape is also an obstacle at times. In the case of Brazil, it takes an average of 150 days to set up a business, for example, and in many Latin American markets there are further tax, pension, and budget reforms that still need to be addressed.

But there is a great deal of variation between Latin American countries, and while particular issues may cause concern in one state, in another they may not. It is wise, for instance, for PE players to consider the exit environment of a country before committing themselves. While exits in Brazil, for example, are fairly uncomplicated, due to its deep stock market, PE firms would find it harder to exit via IPO in a country such as Peru. This factor must be taken into account when formulating any investment strategy. In order to make the most of a transaction, local knowledge is more than a requirement, it is essential. Latin American countries are highly diverse in terms of GDP composition, natural resources and institutional and political stability. Therefore, a local presence, local market knowledge, and an extensive network of local players are key for making successful investments in the region. Building relationships is also essential for regional expansion. Once a firm has its portfolio well established in one country, it is much easier to reach out to regional neighbours.

With the region quickly becoming a new playground for private equity, nearly all Latin American countries show a relative under-penetration of investment as a percentage of GDP. There is then, still a large ‘catch-up’ potential compared to the advanced world and other emerging markets, and a wealth of opportunities for prospective players.

Latin America offers compelling long-term openings in a wide array of sectors, but each country entails a unique set of advantages and challenges. Those who are tempted must look at each country individually, taking on board the input of local advisers. But despite any teething troubles, the region will continue to benefit from structural improvement, rising wealth and strengthening economic ties to create an exciting environment for PE investors.

Private Equity and Venture Capital funds are turning their eyes to Latin America

published by Editor on December 8th, 2011

Tags: LAVCA, Private Equity, Tech, Venture Capital

By Mariana Cristancho-Ahn
Univision News

December 8, 2011— The gloomy economic outlook in the U.S. and Europe is encouraging private equity and venture capital investors to look for opportunities in Latin America, and they are already finding good deals.

Investments in technology-related business like e-commerce, software development, and data storage to mobile applications started to take off in the region in 2007, according to the Latin American Venture Capital Association (LAVCA).

Fundraising for private equity and venture capital in the region reached a record of $8.1B in 2010. Chile, Brazil, and Mexico are the top ranking countries promoting the development of entrepreneurial opportunities with a stable regulatory environment.

“There were about 30 member firms in LAVCA in 2007 and today we have over 120 firms. That includes all kinds of global private equity and venture capital firms going into Latin America and lots of local firms that are active across the region as well,” said Cate Ambrose, President and Executive Director of LAVCA in an interview with Univision News after a panel about the 2012 outlook for private equity and venture capital in Latin America.

The panel, organized by the Americas Society/Council of the Americas in New York, gathered technology entrepreneurs and investment firms together to discuss the challenges and successes they have had stepping into this alternative form of investing.

In June 2010, Colombian-born Andres Barreto launched OnSwipe, an online platform that allows publishers to make their content and advertising more accessible and visually appealing on touch enabled devices. Since then, the company has received nearly $6M in funding from private investors. The main operations of the company are in New York but it works with several Colombian and Mexican-based engineers.

“There’s a lot of talent in Latin America and it is cheaper than doing the same things over here, and the opportunity is the same,” said Barreto in an interview with Univision News. “And before there was no capital, and today there’s actually a lot of capital going to Latin America.”

Argentinian Francisco Alvarez-Demalde is the founding partner of Riverwood Capital, a fund that invests globally in technology, but with particular emphasis in Latin America.

“We help companies to really become more global,” said Alvarez-Demalde. “We don’t focus on small size or big size [companies], we focus on the middle [size companies], and Latin America from this perspective is a great region because there’s a lot of economic growth, a lot of entrepreneurs, and a lot of human capital.”

Alvarez-Demalde is also a founding partner of Globant, a software development company based in Argentina that has gained global recognition. There have been rumors that Globant is preparing to get listed at NASDAQ, but when Univision News asked him to confirm the rumors of a potential initial public offering (IPO) Alvarez-Demalde just said that “it is possible,” and that he couldn’t give further details.

Nurturing Start-Ups in Brazil, With a Nod to Silicon Valley

published by Editor on October 24th, 2011

Tags: Brazil, LAVCA, Member firms, Venture Capital

By Vinod Sreeharsha
New York Times Dealbook

October 24, 2011 – When the investment firm Monashees Capital first called Juliano Ipolito, the co-founder of an online handicrafts marketplace, he assumed that he would have to visit the firm in São Paulo.

Brazilian investment firms have traditionally had distant relationships with the companies they finance and are held in low regard by entrepreneurs.

Instead, three Monashees partners, including the co-founders Eric Acher and Fabio Igel, jumped into a car and drove in blistering heat almost 60 miles to Campinas. They spent several hours with Mr. Ipolito and his wife, Monica Ipolito, co-founder of their start-up, Elo7, getting to know them and explaining their role in developing early-stage Internet companies.

Initially, the Ipolitos “did not want to do a deal,” Mr. Igel said, because “they did not need the money and they were happy.”

But the visits to Campinas continued and the relationship grew. Recently, more than seven months after that first call, Elo7 secured Series A financing from Monashees and the American venture capital firm Accel Partners.

The deal illustrates the emergence of an Internet start-up community in Brazil. Homegrown Monashees identified the entrepreneurs, developed the relationship and early on brought in a major Silicon Valley player as a partner to make a rare early-stage investment. That change in the investor-entrepreneur relationship here comes as United States venture capital firms are starting to take notice of Brazil.

During Brazil’s rise, several economic sectors have attained global prominence, but the Internet has been a notable exception. Nasdaq does not have a single Brazilian Internet company listed, and the country’s own exchange has very few.

This is not for a lack of talent. In 2000, Brazilian professors in Minas Gerais created Akwan Information Technologies, which was acquired by Google in 2005 and became the Internet giant’s research and development center in Latin America.

But today’s entrepreneurs are starting to believe their options are wider, so they are building companies for the long haul that can rival multinationals instead of getting consumed by them. This is changing in part because of firms like Monashees.

According to Claudio Vilar Furtado, an authority on Brazilian venture capital and private equity, and professor at Fundação Getulio Vargas, Monashees is among a small group of firms introducing “a new paradigm for the type of relationship that nurtures entrepreneurs in a very positive and value-increasing way.”

Other investment firms include Astella Investimentos, Ideiasnet and FIR Capital. All are filling the void of private sector financing for start-ups.

According to the New York-based Latin America Venture Capital Association, five of 32 venture capital and private equity deals in Brazil in the first half of 2011 were early stage, seed or incubator investments. In 2010, that ratio was 12 of 28.

Monashees today holds $70 million, up from $30 million in July 2010. Investments range from $500,000 to $5 million for the initial round. The most it has invested in a single company via multiple rounds is $7 million. One of the partners, Mr. Acher, says that the firm typically takes 30 percent ownership in a start-up, with a range of 20 to 40 percent.

In 2010, Mr. Acher said that the firm was likely to make just two to three investments per year, because of the time it took to develop relationships. But this year, Monashees has already made at least nine new investments in nine different Brazil-based start-ups. One these new companies, GetNinjas, an online marketplace for services that was founded by two Brazilians, Eduardo L’Hotellier and Diego Dias, began recently.

The unexpected surge in investment opportunities in Brazil for Monashees is partly because entrepreneurship is becoming more accepted as a viable career.

For example, Mr. L’Hotellier, who previously worked at McKinsey & Company and Bain Capital, had his pick of corporate jobs, but he chose entrepreneurship.

A second reason is that failure is becoming less of a stigma. Mr. Dias, for instance, tried to start a company in the past but says that, “I was with the wrong partners.”

Yet, after meeting Mr. L’Hotellier, he was willing to try again. Young Brazilians are also encouraged by their compatriots returning from the United States, like Julio Vasconcellos, a graduate of the University of Pennsylvania and Stanford Business School, who co-founded the country’s first daily deal site, Peixe Urbano, in Rio de Janeiro in 2010, backed by Monashees and Benchmark. Its initial angel investor was

Chamath Palihapitiya, who says he has participated in every financing round since.

And even as Brazilians are returning, Monashees has invested for the first time in Americans who, in a role reversal, have come to Brazil seeking greener pastures.

Baby.com.br, an e-commerce site for baby products that started this month, was founded by two Americans, Kimball Thomas and Davis Smith. And they chose a Brazilian V.C. firm over a Silicon Valley one.

Mr. Thomas said that from their initial meetings with Monashees, “it became clear that if we work with these guys, they are with us daily.”

“We knew that we had a highly interested partner that was on the ground with the type of relationships and contacts we needed,” he said. “Otherwise we are just a couple of guys showing up with suitcases of money,” with an idea but unsure how to execute it.

Other investors in the Baby.com.br financing round that Monashees led are Ron Conway’s SV Angel and Mr. Palihapitiya, who has invested in three companies with Monashees.

After the investment round, which raised $3 million, Tiger Global Management contacted Monashees, expressing interest in the company and subsequently adding $1.5 million in April.

“Tiger would not have been interested in us had we not raised money from Monashees,” Mr. Smith said.

Monashees faces numerous challenges, in particular producing its first exit.

“We need to get to liquidity events, and it is going to take some time,” Mr. Acher said. “We still have to prove ourselves.”

And increased competition means that Monashees is losing out on deals for the first time, although that’s an expected result of the sector’s evolution.

Whether Monashees and the start-up scene here will succeed will also depend on their American partners and whether they can adapt.

Accel, which has made two investments with Monashees, also played a crucial role in winning over the Ipolitos, including introducing a Flickr co-founder, Stewart Butterfield, who shared his doubts about taking financing in the photo-sharing site’s early days.

“How we behave will determine how much they trust us in the future,” Kevin Efrusy, an Accel partner, said of this new group of Brazilian entrepreneurs. “If we behave well, we will be able to partner with entrepreneurs there for generations.”

But, he said, “if we behave badly, by optimizing short-term gains and trying to take advantage of people, we will wreck the ecosystem.”

BTG gains top banker as it eyes expansion

published by Editor on October 2nd, 2011

Tags: Financial Services, Fundraising, LAVCA

By Megan Murphy
Financial Times

October 2, 2011 – Roger Jenkins, the high-profile former Barclays executive, has joined BTG Pactual as a managing partner as Brazil’s largest independent investment bank and asset manager gears up its ambitious expansion plans.

Mr Jenkins, a star banker best known for orchestrating a £7bn fundraising for Barclays from Middle East investors at the height of the financial crisis, brings with him deep ties to the sovereign wealth funds that are now looking to tap into Latin American growth.

He will sit on the bank’s global management and investment committees, and will be charged with identifying investment opportunities as well as raising money from investors.

BTG closed a $1.6bn private equity fund in late June, the third-largest private-equity fundraising effort ever in Latin America, in a bet that Brazil’s consumer and investment boom will continue.

“This is an entrepreneurial partnership and Roger is an entrepreneur,” Huw Jenkins, the former UBS investment banking chief who joined BTG last year, told the Financial Times.

Roger Jenkins’ was reported to be Barclays highest-paid banker on a package of more than £40m when he left in 2009 to set up the corporate finance boutique, Elkstone Capital.

Elkstone, which was looking at investing in distressed banking and property assets in Ireland as well as international deals, including in Brazil, has since been wound up, and a handful of its employees have followed Mr Jenkins to BTG Pactual.

BTG, by contrast, has grown rapidly on the back of Brazil’s vibrant capital markets and mergers and acquisitions activity since it was bought out of UBS for $2.45bn in 2009. The bank was valued at about $10bn in a deal in December when a group of investors including three sovereign wealth funds – Singapore’s GIC, China’s CIC and the Abu Dhabi Investment Council – bought an 18.7 per cent stake.

André Esteves, BTG’s chief executive, last month told the FT that he was looking to hold an initial public offering as early as next year.

Fundraising for Latin American private equity and venture capital is expected to hit a record $10bn in 2012, according to figures released this month by the Latin American Venture Capital Association. BTG is targeting opportunities in infrastructure, agriculture and natural resources.

Mr Jenkins, who moved to California after leaving Barclays, will remain based in Los Angeles while travelling frequently.

“People see opportunities to invest in Latin America and are willing to deploy risk capital,” Mr Jenkins said. “That makes it interesting.”

Banco do Brasil unit to raise $555 mln for fund

published by Editor on September 20th, 2011

Tags: Brazil, LAVCA, Private Equity

By Aluisio Alves
Reuters

September 20, 2011 — A unit of Banco do Brasil (BBAS3.SA: Quote, Profile, Research), the nation’s biggest lender by assets, plans to raise 1 billion reais ($555 million) for a private equity fund focused on renewable energy projects, underscoring the search for high-yielding investments in the long term.

The unit, known as BB DTVM, lunched the fund in August jointly with Banco Votorantim and an undisclosed foreign investment fund, said Carlos Massaru Takahashi, president of the Sao Paulo-based asset manager, which oversees 410 billion reais in assets.

Targeted projects include windpower and biomass plants, as well as small-sized hydropower dams, he noted. The fund, which will funnel resources into the projects through a special purpose vehicle, will invest in as many as 35 projects — some of which could have an investment horizon of up to 30 years.

“This should be the first of many funds focused on infrastructure investments,” Massaru said on the sidelines of an event in the resort city of Florianopolis.

Alternative energy investments have been a favorite target for buyout firms seeking to tap Latin America’s largest economy for growth and returns. BB DTVM’s effort comes at a time when fund-raising for Brazil-focused private equity funds is expected to reach a record.

Buyout firms raised $4.9 billion in the first six months of the year, 59 percent more than the same period a year earlier, according to the Latin American Venture Capital Association, LAVCA. The group said last week that the strong results for the first half put 2011 on track to surpass the record-setting total of $8.1 billion raised from investors last year.

Brazil lured two-thirds of total Latin American fund-raising through June, LAVCA noted.

BB DTVM and its partners in the fund expect to list the fund and some of the projects, Massaru said, adding that about 15 percent of the distribution will be focused on retail investors.

Concessions and other heavy construction projects are being considered for further fund-raising efforts, the executive said.

The unit also has plans to expand in other South American nations, brokerage. Targets include shops in Chile, Colombia and Peru, he added.

Brazilian asset management firms are expanding in other South American nations including Chile, where stable economic conditions and low interest rates have drawn wealthy investors seeking to diversify their investments.

In addition, the same money managers are looking elsewhere in Latin America for complex instruments such as exchange traded funds due to a dearth of such assets in South America’s largest country.

BTG Pactual [BTG.UL], Brazil’s biggest independent securities firm, is in talks to acquire Chilean rival Celfin Capital. Itau Unibanco’s wealth management unit recently sealed a deal with Chile’s Munita, Cruzat & Claro to increase its presence in that market. ($1=1.80 reais)

(Additional reporting by Guillermo Parra-Bernal in Sao Paulo, editing by Matthew Lewis)

Latin American fundraising set to break record

published by Editor on September 15th, 2011

Tags: Exits, Fundraising, LAVCA

By Sam Sutton

PEI

September 15, 2011 — While fundraising appears on pace to break the record $8.1bn raised in the region in 2010, Latin American deal volume has fallen by 30% compared to the same period last year.

Latin American private equity and venture capital raised $4.9 billion across 14 funds in the first half of 2011, posting a 59 percent increase over the same period last year, according to a report from the Latin American Venture Capital Association.

A majority of committed capital went to Brazilian funds, which accounted for 67 percent of Latin America’s first-half fundraising. The country has hosted several billion dollar fund closings in the last few months, including BTG Pactual and Vinci Partners, which closed on $1.6 billion and $1.4 billion respectively for their funds late in the first half. This summer, Patria Investimentos closed on $1.25 billion for its fourth fund and Gavea Investimentos picked up $1.8 billion for its fourth fund, setting the record for the largest South American fund closing in history.

If first half fundraising trends continue, the total amount raised will shatter the record for the amount raised for the region, set at $8.1 billion last year.

Curiously, as commitments in the region peaked, investments appear to have slumped. Deal volume fell by 30 percent compared to the same period last year, when $3.8 billion changed hands.

In its report, LAVCA said that exits have also spiked for the region, with 33 private equity-backed exits valued at $8.9 billion – well above the $3.5 billion raised through exits in 2010. Ashmore Energy International’s divestment of its Latin American portfolio accounted for over $4 billion of the total, according to the report.

LAVCA is a non-profit organisation that supports the growth of the Latin American and Caribbean private equity and venture capital industry.

Private equity, venture capital fundraising could hit at least US $10bn in 2012

published by Editor on September 15th, 2011

Tags: Fundraising, LAVCA

By Jorge Porter

Business News Americas

September 15, 2011— Fundraising for Latin American private equity and venture capital (PE/VC) could hit at least a record US$10bn in 2012 given that global investors are more willing to increase their exposure to the region, Cate Ambrose, president and executive director of the Latin American Venture Capital Association (LAVCA), told BNamericas.

According to LAVCA data, PE/VC fundraising in the region grew 59% to US$4.9bn in January-June compared to the same period in 2010, with the bulk coming from Brazil.

Based on these figures, LAVCA is forecasting that 2011 is on track to surpass the record-setting total of US$8.1bn from the previous year.

“I see that there is enough global appetite to easily raise over US$10bn in 2012, and there are no signs that investors’ interest in the region will decay. But in the end it all depends on the number of managers that can raise funds in the market as large as we have seen so far,” Ambrose said.

Two funds of more than US$1bn closed in Brazil in 1H11 – BTG Pactual with US$1.6bn, and Vinci Partners with US$1.4bn. Local investment firms Pátria and Gávea closed on an additional US$3.2bn in the third quarter.

The region’s fundraising figure could see a boost if European funds and global firms such as Kohlberg Kravis & Roberts (NYSE: KKR) and Silver Lake raise funds directly aimed at the region, as they are investing more in Latin America given that developed markets continue to languish, Ambrose said.

Investors’ sustained interest in the region is reflected in the results of LAVCA’s 2011 limited partners opinion survey. Currently, 90% of global investors who participated said they are either allocating funds in Latin America or doing due diligence, up from 82% a year ago.

Furthermore, 55% indicated that they expect to increase their allocations to fund managers investing in the region over the next 12 months, with 68% planning increases in the next 36 months.

LAVCA will carry out its 2011 summit and investor roundtable in New York on September 27-28.

More PE and VC Money Flows to Brazil

published by Editor on September 14th, 2011

Tags: Brazil, LAVCA, Private Equity, Venture Capital

By Joanna Glasner
peHUB

September 14, 2011 – Based on conversations I’ve eavesdropped on at venture and private equity events in the past few months, it certainly seems like more industry insiders are eyeing investments in Latin America, particularly Brazil.

Now there’s more hard data to back up that supposition. Fundraising for Latin American private equity and venture capital investment rose to $4.9 billion in the first half of this year, up 59% from the same period last year, according to a report released today by the Latin American Venture Capital Association (LAVCA).

Brazil accounts for the lion’s share of committed capital, with 67% of the total amount raised dedicated there. That includes two billion-dollar-plus Brazilian funds, BTG Pactual ($1.6 billion) and Vinci Partners ($1.4 billion). Additionally, two Brazilian investment firms, Pátria and Gávea closed on an additional $3.2 billion in the third quarter, meaning this year’s fund-raising totals are well on track to surpass the $8.1 billion raised in all of 2010.

Exits also surged in the first half of the year, surpassing all of 2010, with 33 PE-backed exits valued at $8.9 billion, according to LAVCA. Strategic sales dominated the exit market, with Ashmore Energy International’s divestment of its Latin American portfolio accounting for over $4bln of the exit total. However, there were also some IPOs on local and international exchanges, including $1.25M raised by private equity-backed Arcos Dorados, an Argentina-based McDonald’s franchisee, through a listing on the New York Stock Exchange in April.

Building the venture capital and private equity

industry in Latin America and the Caribbean.