(Bloomberg) May 6, 2011 – JPMorgan Chase & Co.’s Gavea Investimentos Ltda., the investment company founded by former Brazil central banker Arminio Fraga, is setting up a $2 billion fund to buy stakes in Brazilian companies.
Gavea, which manages $2.5 billion in three private-equity funds, will return proceeds from two of them to investors this year as it starts the new one as early as this month, Gavea partner Amaury Bier said in an interview at his office in Rio de Janeiro yesterday. Consumer goods are among the industries Gavea identified as the best opportunities for stake purchases, though its funds don’t focus on specific sectors, he said.
“The consumer story in Brazil” is being boosted by income growth, said Bier, a former deputy finance minister who runs Gavea with Fraga. “This is very powerful and will continue.”
Blackstone Group LP, Carlyle Group and KKR & Co. are among global firms buying stakes in Brazilian businesses to tap family consumption that jumped 7.5 percent in the fourth quarter from a year earlier. Private-equity funds have as much as $8 billion ready to buy stakes in the country, Piero Minardi, a partner at Gavea, said at the Bloomberg Brazil Economic Forum in Sao Paulo on March 30.
Raia SA, the Brazilian drugstore chain that raised 655 million reais ($404 million) in an initial public offering last year, is among family-owned consumer goods businesses that Gavea invested in and helped sell shares. It has gained 5.4 percent in Sao Paulo trading since the IPO in December.
JPMorgan’s Highbridge Capital Management agreed to buy 55 percent of Gavea last year and may acquire a further 45 percent within five years. The sale to JPMorgan gives Gavea access to a “fantastic distribution network outside Brazil” while helping the New York-based bank increase its presence in the country as other global securities firms build up their local teams, Bier said.
UBS AG’s Brazil unit plans to more than double its workforce as it seeks to reach 5 billion Swiss francs ($5.7 billion) of private-banking assets under management in five years, country manager Lywal Salles said in an interview last week.
Itau Unibanco Holding SA and Banco Bradesco SA, Brazil’s two largest banks by market value, and Spain’s Banco Santander SA have also set up private-equity funds in Brazil.
By Adriana Chiarini and Carlos Caminada