Mexico poised to take its turn in the sun

published by Editor on May 11th, 2012

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By Taina Rosa
The Deal

May 11, 2012 – An investment environment that is improving on several fronts could lead to a banner year for private equity firms in Mexico, according to local firms and trade groups.

On Wednesday, May 9, the Latin American Private Equity & Venture Capital Association, known as Lavca, released its 2012 scorecard, which ranks Latin American markets according to their regulatory environments. Mexico, with a score of 65 out of 100, remained in the third spot behind Chile, ranked No.1 with a score of 75, and Brazil, in second place with a score of 72.

Nevertheless, while the first two countries’ scores remained unchanged, Mexico’s grade went up two notches over last year.

“The country’s score on capital markets development now matches that of Chile and Brazil, thanks to ongoing efforts by the Mexican stock exchange to improve access and increased participation from local pension funds,” said Cate Ambrose, president and executive director of Lavca.

The inclusion of local pension funds has proved critical to the development of private equity in Mexico. The creation of publicly listed trusts known as development capital certificates, or CKDs, in 2009 allowed pension funds to invest in private equity, infrastructure and real estate funds.

According to the Emerging Markets Private Equity Association, Mexican pension funds manage about $120 billion in assets. And since the creation of CKDs, private equity firms in the country have raised $3 billion from local pension funds.

Most private equity firms in Mexico also raise parallel funds with commitments from international investors while raising their CKD funds with commitments from local pension funds.

And even though it is safe to predict that Brazil will take the lion’s share of fundraising commitments in Latin America in 2011 Brazilian firms raised $8.1 billion while Mexico funds raised $363 million. Some Mexican firms are already beating their own fundraising expectations.

In April, Mexico City-based Wamex Private Equity announced the final closing of its second growth equity fund, MIF II, with $160 million, more than the
$150 million the firm expected to raise. “We are very pleased to have exceeded our target under very tight funding conditions. Mexico is surging amongst emerging markets, and we have a rich pipeline for building a portfolio of leading companies,” Wamex managing partner Ernesto Warnholtz said.

The largest locally owned Mexican private equity firm is Nexxus Capital. Founded in 1995, the firm closed a $315 million fund, composed of a $220 million CKD fund and a $95 million parallel fund, in March 2011.

Officials at other Mexican firms on the fundraising trail said that although Brazil still poses tough competition, they expect their new funds to be larger than those they have closed in previous years.

According to data from Empea, some of the private equity firms that are on the road raising funds to be solely invested in Mexico are Macquarie Group Ltd., which is raising $1 billion for its Macquarie Mexican Infrastructure Fund, and Alta Ventures Mexico, which is raising $75 million for its Alta Ventures Mexico Fund I.

More fundraising opportunities eventually lead to more dealmaking, and by the end of 2012, private equity investment in Mexican companies is expected to more than double in comparison to last year. “Private equity investments in Mexico are expected to reach $1 billion this year,” said Arturo Saval, a partner at Nexxus Capital and president of Asociación Mexicana de Capital Privado AC, or Amexcap, Mexico’s private equity association. Saval expects between 30 and 35 transactions to take place in 2012.

According to Lavca data, in 2011 private equity firms invested $459 million in 22 deals in Mexico. That’s a 118% increase over 2010, when $212 million were invested in 19 transactions, all in the middle market.

Private equity firms tend not to announce the amounts they pay for acquisitions. Some of the larger deals to have taken place in Mexico for which terms were announced are Macquarie’s acquisition of a package of 199 telecommunications towers from Mexico City telecom company Pegaso PCS SA de CV for about $36 million in 2011, Eton Park Capital Management LP’s acquisition of Financiera Independencia for $53.5 million in 2010 and Conduit Capital Partners LLC’s acquisition of Impro for $41.3 million in 2009.

Buyout firms have run into some difficulties, mainly skepticism among business owners. To overcome that resistance, Amexcap is focusing on educating local owners on the benefits of taking in a private equity partner. For its annual event, held May 8, the association invited a number of business owners so they could network with the private equity firms in attendance.

“It is true that Mexico’s business owners prefer to have control over their companies, but they are learning that a private equity partner can help companies finance expansion and attract highly competitive management teams,” said Joaquín Avila, managing director of EMX Capital Partners.

Saval agrees. “Business owners’ perception of private equity is definitely changing for the better,” he said.

There’s plenty of room for private equity to grow in Mexico, as the sector represents only 0.02% of gross domestic product. In comparison, in the U.K., to which Lavca gives a score of 96, private equity represents 0.5% of GDP.
In Israel, with a score of 78, private equity represents 0.7% of GDP. The U.S. is not included in Lavca’s report.

And as Darby Private Equity managing director Jaime Salinas told Empea:
“There are more than 30,000 companies in Mexico with revenues between $10 million and $100 million. The opportunity is huge, and funds are not competing at all. We don’t meet our friends or competitors when looking at deals.”

“Mexico is very well positioned for growth. It is an underserved market with great opportunities for dealmaking,” said Scott McDonough, managing director of Alta Growth Capital. “Mexico is poised to have great things happen.”

Venture capital fuels Latin American entrepreneurship

published by Editor on April 29th, 2012

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By Boris Hirmas
Miami Herald

April 29, 2012 – Venture capital has begun playing an increasing role in fueling the Latin American region’s entrepreneurial endeavors.

In its 2011 Scorecard, the Latin American Venture Capital Association estimated that funding for venture capital and private equity deals in Latin America more than doubled from 2009 to 2010, topping $8.1 billion. Of the 12 nations in the region evaluated by the association, Chile, Brazil and Mexico respectively scored highest on a range of criteria that define a favorable investment climate, including political, legal, regulatory, tax and other risk measures.

Latin America (including Central America, Mexico and the Caribbean) is a diverse, dynamic market of nearly 600 million people, almost twice the U.S. and Canadian populations. While the region’s $5.3 trillion 2010 GDP is just a third of those countries’ combined GDP, prospects for the area’s economic growth are bright, due to booming commodity exports and a rising middle class.

A United Nations study revealed that the number of Latin Americans considered “poor” declined from 44 percent of the population in 2002 to 32 percent in 2010. In effect, the region’s market for middle-class consumption grew by 70 million people in just eight years.

For all that progress, Latin American venture capital investing lags behind countries such as the U.S., Europe, Israel and other major economies. That’s partly due to the need for continued entrepreneurship support from governments, financial institutions and regulatory authorities. More fundamentally, however, Latin America’s traditionally risk-adverse business culture must change its mindset to accept failure not as shameful defeat but as the price of eventual success.

Fortunately for the region, signs of entrepreneurship are growing. In a keynote speech at the Americas Venture Capital Conference in Miami last November, serial entrepreneur Wences Casares said that today, when he speaks before university-level business classes in Latin America, the number of students interested in starting their own companies is the highest he’s ever seen.

“Fifteen years ago,” he said, “everyone preferred working for large multinational companies or their governments.”

As founder of two successful online businesses in Latin America, Casares also noted that technology allows startups to flourish with much less capital than more traditional brick-and-mortar businesses. What’s more, Internet-based startups can transcend national boundaries in Latin America, effectively creating pan-regional markets where none existed before.

The Latin American Venture Capital Association has noted that the number of Latin America technology deals funded in the first half of 2011 rose 133 percent versus the year prior to nearly a third of all funded deals, far ahead of any other sector.

Miami serves Latin America as a wellspring of Angel and venture capital funding, thanks to a large expatriate community from the region that understands its history, traditions, culture, challenges and, above all, its potential. Miami’s Angel and venture capital community has much more of a pan-regional view of Latin America’s markets and cross-border business opportunities than in-country investors.

Given this broader perspective, Miami’s Angel and venture capital community can provide Latin American startups with a more nurturing entrepreneurial environment and encouragement that’s free of any national parochialisms that could hinder a new enterprise. For instance, a new venture in Chile aiming to quickly expand to other Latin American countries may receive pushback from its local Chilean investors.

The Miami Angel and venture capital community can also act as intermediaries with venture capitalists in Silicon Valley and elsewhere, providing introductions to Latin American entrepreneurs — along with guidance about navigating the region’s challenging business environment.

That guidance can be vital to winning support in the United States. Latin American entrepreneurs who have traveled to Silicon Valley to pitch venture capitalism there, report a general lack of knowledge about the region. Certainly that’s partly due to the overwhelming number of deals from within the Silicon Valley and elsewhere, where political, legal and regulatory risks are known and stable. After all, venture investing inherently involves high risks, so why add unknowns to the mix?

The answer to that question: Any Latin American entrepreneur making it past the seed stage has already met major challenges posed by their still-maturing Latin American business environment and that entrepreneur has a much greater chances of success. As that environment continues to mature, with risks better known and stabilized, the region itself will become ever more attractive to venture capitalist investments.

El ‘boom’ del capital privado en AL (en español)

published by Editor on April 24th, 2012

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By Víctor Esquivel y Fernando Torres
CNN Expansión

April 24, 2012 – Los indicadores económicos sobresalientes, la demanda proveniente del crecimiento de la clase media, la creciente participación de los inversionistas locales y las políticas gubernamentales que apoyan el desarrollo económico, han creado un ecosistema económico favorable para el desarrollo del capital privado en América Latina (AL). Esto se evidencia con el levantamiento de capital e inversión de los fondos de capital, los cuales rompieron récord en 2010 y 2011.

A finales del 2011, se realizó en Nueva York la “Conferencia Anual Sobre Capital Privado en América Latina”, organizada por la Asociación Latinoamericana de Capital Privado y Emprendedor (LAVCA por sus siglas en inglés), donde participó KPMG. El evento reunió a inversionistas, asesores, reguladores y fondos de capital, quienes compartieron sus perspectivas sobre las oportunidades, retos y tendencias del capital privado en la región. Algunos de los temas discutidos fueron:

El capital privado en América Latina
En el 2010, la industria del capital privado rompió récords en AL con el levantamiento de aproximadamente 8,000 millones de dólares, incluyendo el cierre de dos fondos de aproximadamente 1,600 millones de dólares cada uno. En 2011, la tendencia prevaleció levantando aproximadamente 5,000 millones de dólares de capital en la primera mitad.

Por la cantidad de recursos y creciente interés de corporaciones internacionales por tener presencia en la región, se tiene que tener precaución de no sobre calentar el mercado. Nótese que el consenso general del evento indicó que aún existen oportunidades en diversos sectores y el incremento en competencia por transacciones es manejable. Algunos de los sectores más atractivos son: infraestructura, agro-negocios, educación y servicios.

El 2011 también destacó por la desinversión de activos. En la primera mitad, los fondos de capital materializaron 8,900 millones de dólares en la venta de participación accionaria en 33 compañías, incluyendo seis colocaciones públicas en Bolsas de valores locales. Las colocaciones representaron más un evento de financiamiento que una desinversión, debido a factores como el tamaño de las compañías, los mercados locales y los bajos múltiplos.

La manera de negociar en Brasil es diferente a México o Colombia. Como resultado, una estrategia de los fondos para ejecutar inversiones en AL es combinar conocimiento del mercado local con experiencia en un sector en específico de países desarrollados. Un modelo de negocios que ensambla equipos de trabajo con profesionistas que hayan trabajado en países desarrollados y deseen regresar a su país para abrir una oficina donde apoye las inversiones del fondo.

Otros fondos de capital también han completado inversiones usando una estrategia de inversión enfocada a un país. Las dos estrategias han funcionado, sin embargo se recomienda antes de elegir la estrategia una considerar el tamaño del negocio objetivo, el mercado, características del comprador, tipo de inversionistas e integración de la región.

El consenso concluyó que las expectativas para las inversiones y los administradores de fondos de capital en AL son altas y seguirán creciendo debido al número de inversionistas y a las atractivas oportunidades.

Un tema que llamó mucho la atención en el evento fueron las inversiones de impacto social (ahorro de energía, microcrédito, etc.) las cuales no solo están siendo apreciadas por los grandes retornos monetarios, sino por el impacto social y ambiental que genera.

Más recursos para el capital emprendedor
En este contexto tenemos buenas noticias: Se esperan más recursos para el capital emprendedor en el corto plazo incluyendo multinacionales de la industria de telecomunicaciones, fondos de capital de países desarrollados y vehículos promotores de inversión locales.

Similar al capital privado en los últimos 15 años, cambios estructurales han creado un ambiente favorable para el desarrollo del sector emprendedor. Destacan los esfuerzos de gobiernos para el desarrollo de ciencia, la creación de incubadoras de empresas y de vehículos que salvaguardan los derechos minoritarios, haciendo más atractiva la región. Debido a esto, los fondos de capital extranjeros con experiencia en países emergentes ingresan a la región para financiar la nueva generación de emprendedores, tratando de replicar el éxito obtenido en Asia o India.

Retos de la región
Los principales retos para invertir en AL incluyen: recursos y habilidades limitadas en el personal del área de finanzas; limitadas prácticas o políticas para evitar la corrupción; riesgo inherente por tipo de cambio; ambientes regulatorios diferentes; complejos sistemas fiscales; baja calidad de información financiera; y dificultades para apalancar las inversiones con financiamiento bancario.

En resumen, podemos decir que al mismo tiempo que las economías de los mercados desarrollados muestran signos de desaceleración y estancamiento, América Latina continúa llamando la atención de los inversionistas internacionales de capital privado y emprendedor, quienes en base a los récords de levantamiento de capital e inversión observados en 2010 y 2011 continúan explorando alternativas en mercados emergentes. Hoy en día el ecosistema del capital privado en América Latina presenta una oportunidad rentable creciente, sin embargo, existen ciertos retos que los gobiernos locales e inversionistas deben seguir teniendo en cuenta y deberán implementar acciones para mantener y continuar creando un ecosistema favorable.

Capital privado: financiamiento para empresas con potencial

published by Editor on April 17th, 2012

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By Víctor Esquivel
El Universal

Abril 17, 2012 – La asociación de empresas familiares con fondos de capital privado es una fórmula exitosa que acelera el proceso de institucionalización, consolida las fortalezas del negocio y dispone de capital fresco para crecer de manera acelerada en nuevos mercados. Es una forma de financiamiento de bajo costo, que se paga con las futuras utilidades, y que tiene la ventaja adicional de aportar talento, experiencia y mejores prácticas.

En la actualidad, debido a la participación en este mercado de las Afores y a la llegada de nuevos interesados, el mercado muestra un gran crecimiento con operaciones millonarias en diferentes sectores de la economía.

Beneficios
Los fondos de capital privado profesionalizan el negocio y lo dotan de mejores prácticas, como una forma de alcanzar sus metas de largo plazo. Algunos beneficios son: asegurar la sustentabilidad de la empresa en el largo plazo, capitalizar conocimiento y experiencia, y la posibilidad de consolidar el patrimonio de la familia y los accionistas.

A cambio de aportar recursos y experiencia, las alianzas con fondos de capital privado implican algunas restricciones y obligaciones por cuenta de los propietarios y socios. No sólo deben considerar la conveniencia de compartir la dirección del negocio o algunas áreas estratégicas, sino que para atraer y convencer a los posibles inversionistas deben buscar la profesionalización de la gestión, transparentar la información, y sobre todo aceptar el nuevo modelo de hacer las cosas.

Incremento de los fondos
Incremento de la actividad de los fondos de capital privado.

Éste es un modelo de captación atractivo y en auge, que en los últimos años ha ido ganando en variedad y complejidad, por lo que existen opciones en muchos tamaños de negocios, giros industriales y formatos de contratación.

En México es una actividad creciente. De acuerdo a 2011 LAVCA Industry Data, en 24 meses (2010 y 2011) se contabilizaron 45 inversiones y 20 salidas o desinversiones, entre ellas colocaciones de deuda y de capital. En México las operaciones suman alrededor de 0.02% del PIB, mientras que en Brasil representan 0.23% y en países industrializados 1% o más.

Una de las razones para explicar este entusiasmo por los fondos de capital emprendedor es la creciente participación de las Afores, que han invertido una cantidad importante de recursos a través de los Certificados de Capital de Desarrollo e instrumentos estructurados que se negocian en la Bolsa Mexicana de Valores. La regulación actual permite a las Afores destinar hasta 8% de sus recursos a estos instrumentos, y se estima que ese volumen podría rebasar los 8 m il millones de dólares. La Asociación Mexicana de Capital Privado (Amexcap) tiene alrededor de 43 fondos asociados que administran más de 8 mil millones de dólares e invierten en unas 170 empresas de diferentes giros.

En el mercado mexicano existe la liquidez suficiente para financiar el crecimiento de empresas medianas y con potencial; el momento es particularmente interesante debido a que también inversionistas internacionales están buscando oportunidades fuera de Europa y de economías emergentes pero que ya han madurado en este campo.

En este sentido, México es un país con gran apertura comercial y un importante mercado interno, y resulta altamente atractivo para este tipo de inversiones.

Unirse con gobierno

published by Editor on April 13th, 2012

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By Didier Ramírez
El Economista

April 13, 2012 – En México, los recursos destinados a fondos de capital privado y emprendedor representan apenas 0.04% del Producto Interno Bruto (PIB). Este indicador ubica a nuestro país y al sector por debajo de lo que acontece en Costa Rica (0.05%), Perú (0.06%), Panamá (0.07%) y República Dominicana (0.08%), según datos de la Asociación Latinoamericana de Capital de Riesgo (LAVCA, por su sigla en inglés).

Cuando el comparativo lleva a seguir a los referentes internacionales dentro de economías similares, como Brasil y España, el rezago de México es aún más abundante. En el país sudamericano el porcentaje con relación al PIB es de 0.11% y en España se alcanza 0.25 por ciento.

Capitalizar Oportunidades
La realidad del sector evidencia la urgencia para dinamizar la participación de los fondos de capital, consideró Luis Antonio Márquez, director general de la Asociación Mexicana de Capital Privado (Amexcap).

Una vía que se ha identificado es el sumar esfuerzos con los apoyos que ya está destinando el gobierno federal para los emprendedores y el impulso a empresas en desarrollo.

Para Amexcap existen dos áreas en las que se pueden sumar esfuerzos con las acciones de gobierno. El primero va de la mano con el Instituto Mexicano de la Propiedad Industrial (IMPI); mientras que en la otra vertiente está identificar los recursos que ya canalizan las diferentes instancias de gobierno para impulsar empresas, donde se busca hacer sinergias.

“Con el IMPI estamos por definir un plan de trabajo donde se haga una pasarela de proyectos de los investigadores que estén en etapa de emprendedores y que permita identificarse desde la fase inicial y canalizarse con algún fondo de capital privado”, describió Márquez.

El objetivo de los asociados en Amexcap está en cambiar la percepción y la vocación en la generación de patentes, además de impulsar el desarrollo de negocios de los investigadores, para redituar en proyectos rentables para los fondos.

En otro frente, lo que los fondos de capital privado quieren lograr es que los recursos que hasta ahora está destinando el gobierno federal, a través de sus diferentes organismos como el Consejo Nacional de Ciencia y Tecnología (Conacyt), se canalicen a las empresas por medio de los fondos privados, “esto permitiría reducir los costos de administración y hacer más eficiente la canalización de los recursos”, consideró Luis Antonio Márquez.

Lo que sucede actualmente es que los recursos que se entregan a empresas en desarrollo, casi siempre, se complementan con la aplicación de fondos de capital privado. De esta manera, la investigación y el análisis de la viabilidad de proyectos podrían reducirse a uno, en vez de duplicarse como ahora sucede.

La actividad de seguimiento de los recursos canalizados también correspondería al fondo de capital privado.

Aunque estos dos elementos se encuentran en forma de planteamientos, Antonio Márquez reconoce que a través de este tipo de esfuerzos se podrá lograr el crecimiento de este sector, mismo que puede ser más dinámico. Aún así, para este año se estima que los activos de los fondos de capital privado en México pasen de 600 millones de dólares que se manejaron en el 2011 a 1,000 millones en el 2012.

Buyouts to boost Brazil M&A deals after slow start

published by Editor on April 3rd, 2012

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By Guillermo Parra-Bernal and Aluísio Alves
Reuters

April 3, 2012 – Buyouts led by private equity and sovereign wealth funds should help propel merger and acquisition activity in Brazil this year after a flat first quarter, according to investment bankers.

Even as an economic slowdown and buyer caution put the brakes on dealmaking, Brazil’s diversified economy – the world’s sixth-biggest and Latin America’s largest — still lured a large number of sophisticated investors, Thomson Reuters said in its quarterly M&A report.

Companies announced about $21.95 billion worth of deals in Brazil in the first quarter, up 5.6 percent from a year earlier, the report showed. The number of deals — 175 — was nearly unchanged from 174 in the first quarter of 2011.

Brazil’s economy slowed abruptly in the second half of last year and is unlikely to rebound strongly before June. So far this has only slightly weakened Brazil’s bustling job market, the nation’s main engine of growth in recent years, but has hampered manufacturing and lessened incentives for companies to
merge, some analysts said.

Bankers expect M&A activity to gain traction in coming months as retail, consumer goods and infrastructure companies try to add scale and financial muscle by tying up with rivals. Global buyout firms, flush with cash after raising $6.3 billion for their Brazil investments in 2011, may drive such a recovery.

Take private equity, for instance. About half of last year’s Latin American buyouts took place in Brazil, where 64 percent of the region’s capital commitments were invested, the New York-based Latin American Venture Capital Association said last month.

“Investors are ready to invest heavily and do the long-term investment in the country,” said Jean Dreyer, a managing director for Citigroup’s global investment banking unit. “The market is very positive, and this should continue for a long period.”

Citigroup Global Banking & Markets, as the unit is known, led the first-quarter rankings in Brazil based on deal value after advising on two transactions worth a combined $8.15 billion, the data showed.

Citigroup’s Brazil bankers, led by industry veteran André Kok, advised banking giant Itaú Unibanco Holding on its $6.82 billion plan to take card payment company Redecard private.

Kok, who last year left Itaú Unibanco’s Itaú BBA investment banking unit after six years there, also led the team advising Infravix and partners on the purchase of a $1.33 billion license to remodel and operate the Brasilia airport.

Citigroup also was one of two advisers for Abu Dhabi state investment fund Mubadala’s purchase of a $2 billion stake in Brazil’s EBX, an investment holding company controlled by Eike Batista, the nation’s richest man. The deal was not included on the rankings because it took place between Mubadala
and a U.S.-based investment firm controlled by Batista.

Mubadala oversees $46 billion in assets.

ITAÚ BBA
The other adviser to Mubadala was Goldman Sachs Group. Itaú BBA, which ranked second in the quarter with advisory work on deals worth $7.82 billion, helped EBX on the transaction.

“The Mubadala deal is a proxy of what we could see in coming months, as Brazil continues to attract strategic pools of new capital and more sophisticated investor classes,” said Fernando Iunes, global head of investment banking for Itaú BBA.

Itaú BBA worked on nine deals, more than any other top 20 firm in the rankings during the first quarter, the Thomson Reuters data showed.

The nine transactions included CPFL Energia’s $683 million purchase of utilities BVP and SPE Lacenas
Participações between the end of February and the beginning of this month.

Itaú BBA was also one of the advisors to parent Itaú Unibanco Holding on the Redecard deal.

Foreign and local banks kept betting on investment banking as a stable source of earnings despite the slower economy and a possible slump in fees. Fees in Brazil probably fell to about $800 million last year from $1.1 billion in 2010, according to estimates from leading investment bankers.

“All the major investment banks have a presence in Brazil,” Citigroup’s Dreyer said. “In terms of fees … the competition is adding some pressure, but this is not surprising as Brazil isa mature and sophisticated market.”

BR Partners, an independent investment banking firm led by former Citigroup and Goldman Sachs banker Ricardo Lacerda, clinched the third spot in rankings by advising on deals worth $7.08 billion.

 

Q&A: Cate Ambrose, head of the Latin American private equity association

published by Editor on March 23rd, 2012

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By Shanny Basar
eFinancial News

March 23, 2012 – Cate Ambrose, president and executive director of the Latin American Private Equity & Venture Capital Association, is confident about long-term trends after two years of record fundraising for the region.

This week Lavca said in a report that private equity and venture capital firms investing in Latin America raised a record $10.3bn in 2011, overtaking the previous high of $8.1bn set the year before.

FN: After two record years of fundraising, do you see this as a long-term trend for the region?

Ambrose: After two-mega funds were raised in 2010, I did not see where more money was going to come from in 2011 and there are still not that Latin American funds that can raise more than $1bn. I could be proved wrong again but even if 2012 sees a dip in fundraising it will be part of long-term cycle of growth for the private equity industry in the region.

FN: Are local pension funds increasing allocations to private equity?

Ambrose: They are clearly interested in investing but are waiting for a track record to develop and are arduous in doing due diligence. For example, in Colombia they are waiting to see the results of investments they made four to five years ago before deciding whether to increase allocations. There is a need for more funds that are between $100m to $400m in size, which will take many years to develop, but the pool of investors for alternative assets is deepening over time. There is a long-term trend of pension funds wanting to put money with alternative managers around the globe but it is still relatively early days.

FN: Your report showed a growing interest in investing outside Brazil. Do you expect this to continue?

Ambrose: We have seen the trend increase since 2010 and there may be a perception that other countries are less crowded than Brazil and offer lower valuations. It is too early to tell but I expect that a lot of the new funds raised by Brazilian private equity firms will be used outside the country.

FN: The volume of Brazilian initial public offerings has dropped so will a more difficult exit environment make private equity less attractive ?

Ambrose: The IPO market was challenging last year but that is due to global volatility which did not just affect Brazil and there were some high-profile listings last year. However many multinationals want to expand in the region and are willing to pay very attractive prices.

FN: Are there any other important trends?

Ambrose: The major trend is US venture capital firms going into Latin America which we had not seen until the last two years and Lavca will be spending more time and effort on tracking early stage investments. I spent last week in Brazil with Silicon Valley Bank visiting venture capital firms and it is really dynamic with many young people choosing start-ups rather than a job with the government or a big firm.

 

Private equity firms raise record LatAm funds

published by Editor on March 22nd, 2012

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By Shanny Basar
eFinancialNews

March 22, 2012 — Private equity and venture capital firms investing in Latin America raised a record $10.3bn in 2011, overtaking the previous all-time high set the year before by nearly a third.

The Latin American Private Equity & Venture Capital Association said yesterday in its 2012 Lavca Industry Data report that last year beat the previous fundraising record of $8.1bn set in 2010.

Funds focusing on Brazil attracted more than $8.1bn of the total committed to the region with local firms Gávea Investimentos, Vinci Partners, BTG Pactual and Patria Investimentos capturing $7.3bn.

Cate Ambrose, president and executive director of Lavca, said in the report: “While Brazil funds captured the greatest amount of committed capital in 2011, we continue to see a healthy appetite for other regional markets.”

She gave the example of firms such as Linzor Capital Partners and Victoria Capital Partners raising regional funds for deals in multiple countries and large Brazilian firms also expanding into Colombia, Chile, Peru or Mexico.

BTG Pactual, the Brazilian investment bank and asset manager launched by former UBS executive André Esteves, in February acquired Celfin Capital, a Chilean brokerage which also operates in Peru and Colombia

However although fundraising increased, the number of deals remained the same as in 2010, and capital invested fell 10% to $6.5bn in last year from $7.2bn in 2010 according to Lavca.

Marcelo Di Lorenzo, head of Brazil for UK private equity firm 3i Group, told Financial News in January that although competition had increased it was still less than in markets such as China or India and that it is difficult to find teams with a lot experience in Brazil. Di Lorenzo also said that although fundraising has increased there is still only a small amount of capital invested in private equity given the size of the Brazilian economy.

The number of private equity-backed exits did rise last year with 53 exits in the region valued at $10.6bn, a 204% increase from 2010 according to Lavca. Exits included the high-profile $1.4bn listing of Argentina’s Arcos Dorados, the operator of McDonald’s franchisees in the region, on the New York Stock Exchange.

Venture capital firms Capital International and DLJ South American Partners had acquired a stake in Arcos Dorados in 2007 according to Dealogic, the investment banking research provider. DLJ South American Partners subsequently sold another $978m Arcos Dorados shares last October.

Early stage and seed/incubator deals saw an increase in both the number of deals and capital invested compared to 2010. Lavca said: “US and international venture capital firms have moved into the region with a proliferation of early stage deals during 2011 including investments by Accel Partners, Redpoint, General Catalyst and Tiger Global Management in Brazilian start-ups.”

The sectors which attracted the most deals and capital were information technology, energy, and other services which includes fast food chains and franchise businesses.

Latin America at $10.3bn record for fundraising

published by Editor on March 21st, 2012

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By Joe Leahy
Financial Times

March 21, 2012 – Funds raised for private equity and venture capital investment in Latin America last year hit a record as investors sought to tap into fast economic growth in the region.

The amount raised for Latin America reached $10.3bn, up 27 per cent on 2010 which was also a record, with Brazil-dedicated funds accounting for the bulk of the total at $8.1bn, according to figures from the Latin American Private Equity & Venture Capital Association.

“You have by far the deepest pool of fund managers in Brazil and the longest track record of raising and investing multiple funds and returning money to investors,” said Cate Ambrose, president of Lavca.

(Please note: This is an excerpt of the original article. Click here to read the article in the Financial Times.)

10,300 mdd para comprar firmas en AL (en español)

published by Editor on March 21st, 2012

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CNN Expansión

March 21, 2012 – Los fondos para compras de empresas con la mira en Latinoamérica captaron la cifra récord de 10,300 millones de dólares en el 2011, impulsados por una mayor participación de jugadores locales y un mayor interés entre los inversores globales, dijo un grupo de la industria este miércoles.

Los montos captados saltaron 27% respecto del 2010, año en que se habían canalizado 8,100 millones de dólares hacia fondos de capital cerrado en la región, dijo la Latin American Venture Capital Association, con sede en Nueva York.

El año pasado Brasil atrajo un 78% del total del capital comprometido a la región.

Pero el ritmo se acelera en México, Colombia, Chile, Perú y Argentina, donde una competencia menor a la de Brasil por activos existentes está atrayendo la atención de los negociadores de fusiones y adquisiciones.

Algunos fondos también se están expandiendo hacia esos países, ayudando a expandir la inversión de capital privado a través de la región.

“Si bien los fondos de Brasil captaron la cifra más grande del capital comprometido en el 2011, continuamos presenciando un saludable apetito por otros mercados regionales”, dijo Cate Ambrose, presidenta de LAVCA, como es conocido el grupo, en un comunicado.

De acuerdo a LAVCA, las firmas brasileñas Gávea Investimentos, Vinci Partners, BTG Pactual y Patria Investimentos captaron 7,300 millones de dólares, “lo que muestra la fortaleza de los experimentados gerentes de activos de Brasil y el deseo de los inversores globales de ganar exposición” en ese país.

A diferencia de años anteriores, cuando los grandes jugadores globales captaban dinero para inversiones en Latinoamérica, los fondos ahora están optando ahora por invertir a través de fondos dedicados a mercados emergentes o que apuntan simplemente a un país.

Los fondos regionales absorbieron 1,100 millones de dólares del capital total del año pasado, indicó LAVCA. El Carlyle Group, por ejemplo, consiguió 776 millones de dólares para un fondo sudamericano en el 2011.

LAVCA compiló las cifras en un sondeo confidencial que incluyó alrededor de 250 empresas.

Aumentan las ventas
Las compras han crecido en tamaño durante los últimos tres años, lo que indica que los inversores de capital privado están comenzando a percibir los beneficios a largo plazo de invertir en Latinoamérica.

Los fondos captados por la industria para Latinoamérica aumentaron, en un marcado contraste con la caída en la actividad en Estados Unidos o Europa, dijeron los banqueros.

La salida, o la forma en que los fondos embolsan sus ganancias al vender las empresas que compraron, también aumentaron en el 2011.

De acuerdo con LAVCA, hubo 53 salidas -que incluyeron ofertas de acciones al mercado y ventas estratégicas de acciones- valoradas en 10,600 millones de dólares el año pasado, lo que implica un alza del 204% de aumento respecto al año previo.

La turbulencia por la escalada en la crisis de deuda de Europa redujo las salidas en el segundo semestre, agregó LAVCA.

“Las ventas estratégicas fue la salida estratégica preferida”, dijo el comunicado.
Cerca de un 50% de las compras del año pasado tuvieron lugar en Brasil, donde fue invertido el 64% del capital total de la región.

El 46% de las adquisiciones a través de fondos en Latinoamérica habían tenido lugar en Brasil en el 2010.

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