LAVCA | The Association for Private Capital Investment in Latin America
  • About
    • About LAVCA
    • Board, Team, & Advisors
    • Media
    • Contact
  • Members
    • Membership Benefits
    • Current Members
    • Member Access
  • Education & Programs
    • About
    • LAVCA Week
    • Calendar & Past Programs
    • LAVCA Education
  • Research & Directories
    • LAVCA Research
    • Industry data
    • LP Survey
    • Directories
  • ESG & Impact
    • Deal Book
    • LAVCA ESG Deal Awards
    • Impact Report
    • ESG Guidelines
  • Articles
    • Featured Articles
    • Industry News
  • VC
  • Member Login
  • Member Access

LAVCA | The Association for Private Capital Investment in Latin America

A non-profit member organization

  • About
    • About LAVCA
    • Board, Team, & Advisors
    • Media
    • Contact
  • Members
    • Membership Benefits
    • Current Members
    • Member Access
  • Education & Programs
    • About
    • LAVCA Week
    • Calendar & Past Programs
    • LAVCA Education
  • Research & Directories
    • LAVCA Research
    • Industry data
    • LP Survey
    • Directories
  • ESG & Impact
    • Deal Book
    • LAVCA ESG Deal Awards
    • Impact Report
    • ESG Guidelines
  • Articles
    • Featured Articles
    • Industry News
  • VC

Carlyle Injects Additional US$21m into Urbplan Desenvolvimento Urbano

26 March 2014

(Bloomberg) Senior Carlyle professionals have injected an additional US$21m into Urbplan Desenvolvimento Urbano, a real-estate developer in Brazil.

Carlyle Group’s partners are reaching into their wallets to bail out one of the private-equity firm’s first investments in Brazil, seeking to protect its growing business in South America’s biggest economy.

Senior Carlyle professionals have injected US$66.9m and their firm has poured another US$21.1m into Urbplan Desenvolvimento Urbano, a real-estate developer that has been hit with hundreds of lawsuits, in part for failing to complete home sites across Brazil, according to court and regulatory filings. Urbplan needs as much as US$200m to carry out Carlyle’s turnaround plan after an overly ambitious expansion left it with US$305m of high-cost debt.

Carlyle’s misadventure in Brazilian real-estate highlights the risk of doing business in the country almost seven years after the firm’s co-founder, David Rubenstein, said it would be a “huge” private-equity market. Buyout shops seldom use their own cash, let alone that of their partners to rescue investments. For Washington-based Carlyle that move may be necessary to protect its reputation and growing holdings in a country where courts increasingly hold directors and shareholders personally responsible for claims against their companies.

“Limited liability, which used to be the rule, has become the exception,” Bruno Salama, a law professor at Fundacao Getulio Vargas School of Law in Sao Paulo, said in a telephone interview.

Shareholders, including private-equity firms, are typically shielded from being personally responsible for claims against the companies they own. While the Brazilian legal code has limited liability provisions, they offer little protection when it comes to consumer, tax and labour claims.

“This is a serious threat to certain industries, and private equity is one of them,” said Salama, author of a forthcoming book, The End of Limited Liability in Brazil.

Carlyle funds spent a total of at least US$100m to buy a majority stake in Urbplan in 2007 and to continue funding it through 2011. That investment was worthless as of the end of 2012, and fund investors did not put any more money into the company, according to Carlyle’s regulatory filings. In an annual report filed last month with the US Securities and Exchange Commission, Carlyle said if Urbplan failed to complete construction projects, customers or other creditors might seek to assert claims against the private-equity firm “under certain consumer protection” or other laws.

Carlyle is taking steps to revive Urbplan, including hiring a new CEO who specialises in turnarounds.

“Unfortunately, despite our strong investment track record, not every investment works out,” the firm said in an e-mailed statement. “We had an issue and we took action. Alongside the new management team and with a plan in place, we are working hard to turn this business around, including delivering on Urbplan’s projects.”

The investment is a rare black mark for Carlyle, founded by billionaires William Conway, Daniel D’Aniello and Rubenstein in 1987. As of December 31, the buyout firm had invested in more than 470 corporate transactions, returned an average of 30 per cent annually to investors, and oversaw almost US$189b. Even in the rarefied world of buyouts the partners are enjoying heady times. The co-founders collected US$279m in pay and cash dividends last year, a 61 per cent increase from 2012.

Private-equity executives rarely use their own capital to rescue an investment made on behalf of one of their funds.

Carlyle Injects Additional US$21m into Urbplan Desenvolvimento Urbano was last modified: March 26th, 2014 by Editor
BrazilCarlyle GroupReal EstateUrbplan Desenvolvimento Urbano
0
Facebook Twitter Google +

Tech Growth Membership

The 2023 LAVCA Startup Founders Survey is made possible thanks to the support of LAVCA’s Tech Growth Membership, a group of leading tech companies and investors advancing the tech ecosystem in Latin America including AWS, Mercado Libre, Microsoft, Qualcomm Ventures, SVB, Riverwood Capital, Google and Movile.

VC Partner Events

    Tweets

    Missing consumer key - please check your settings in admin > Settings > Twitter Feed Auth

    Submit VC News

    Have private equity or venture capital related news that you would like to share? Submit your press releases and news to [email protected].

    VC Industry News

    • Valor Capital Group and NFX Co-Lead USD9.3m Series A for Brazil’s Praso

      30 August 2023
    • EQT Growth Leads USD85m Series F for Brazil’s Gympass at USD2.2b Valuation

      23 August 2023
    • Tiger Global Leads USD61m Series B for Brazil’s Nomad 

      22 August 2023
    • NASZCA and IDB Invest Lead USD15.5m Series A for Mexico’s Wonder Brands

      17 August 2023
    • Victory Park Capital Provides USD100m Credit Facility for Mexico’s Klar

      15 August 2023
    • General Catalyst Lead USD45m Series B for Brazil’s Tractian

      7 August 2023
    • General Catalyst Leads USD45m Round for Brazil’s Tractian

      7 August 2023
    • ADQ Provides USD100m In Convertible Debt to Brazil’s Loft

      2 August 2023
    • Danish SDG Investment Fund Leads USD31.5m Series C for Mexico’s Bright  

      27 July 2023
    • Colombia’s Foodology Raises USD17m from Andreessen Horowitz, 30N Ventures and Chimera

      19 July 2023

    About LAVCA

     

    LAVCA is the Association for Private Capital Investment in Latin America, a not-for-profit membership organization dedicated to supporting the growth of private capital in Latin America and the Caribbean through research, education, networking and advocacy.

    LAVCA Office

        New York City:
        589 8th Ave, 18th Floor
        New York, NY 10018

    Explore LAVCA.org

    • About LAVCA
    • Board, Team, & Advisors
    • Media
    • Contact Us
    • Membership Benefits
    • Members Only Access
    • Education and Programs
    • Research
    • Policy
    • LAVCA VC
    • Contact Us

    @2020 - LAVCA. All Rights Reserved.


    Back To Top