(Reuters) March 23, 2011 – GP Investments, the largest Latin American buyout firm, agreed to buy a controlling stake in Brazilian stolen car recovery company Sascar Tecnologia for 168 million reais ($101 million), to tap growth in the nation’s buoyant consumer services market.
GP Investments, led by co-Chief Executives Antonio Bonchristiano and Fersen Lambranho, made the purchase through its GP Capital Partners V fund, according to a regulatory filing. It did not disclose whether the purchase was made in cash or through other means.
The transaction will allow the Bermuda-based private equity fund to “enter the dynamic and promising market for stolen vehicle monitoring,” the filing noted. Sascar’s biggest clients include car insurance companies, logistics and transport companies and security risk managers.
Sascar’s purchase represents a bold bet on Brazil’s consumer boom by offering investors exposure to the nation’s brisk growth in vehicle sales. As Brazilians have greater access to credit to buy more cars, rising crime in the largest metropolitan areas has led to a surge in the number of stolen vehicles over the past years.
Five percent of Brazil’s car fleet uses monitoring systems, which use a transmitter hidden in the car’s engine that helps the police track and recover it often within a few hours, the filing said.
“Apart from that, the fleet has grown considerably, with registrations hitting records sequentially for four years,” GP investments noted.
Brazilian depositary receipts of GP Investments fell 1.7 percent on Wednesday to 6.28 reais. The stock has shed 26 percent over the past 12 months.
Sascar, which was founded 11 years ago, currently offers services and monitoring coverage to about 180,000 vehicles. It has more than 500 branches across Brazil, according to the filing.
Rivals including the merchant and private equity units of BTG Pactual [BTG.UL], Brazil’s largest independent securities firm, have also looked for takeovers in the automobile industry.
BTG last year unveiled the purchase of a minority stake in Mitsubishi Motors do Brasil, or MMCB. Previously, it had purchased a majority stake in garage operator Estapar.
At the start of last year, the number of vehicles per capita in Brazil, 179 per 1,000 people, was well below the United States’ 478 per 1,000 people, which makes the market ripe for growth.
Automobile sales in the country jumped to 3.5 million units in 2010 from 3.14 million in 2009.
By Guillermo Parra-Bernal