LAVCA data on private capital activity in Latin America through year-end 2022
LAVCA has released its Latin America 2023 Industry Data & Analysis. The complete PDF report provides robust analysis and insight into the fundraising, investment, and exit activity among private capital funds investing in Latin America.
Key takeaways from the report are included below. Members also have complimentary access to the Industry Data Excel file.
Private capital fund managers deployed USD28.2b across 1,352 deals in Latin America in 2022, driven by a surge in investment in infrastructure assets.
- Investors continue to support Latin America’s demand for infrastructure development, especially around modernizing and expanding transportation, energy and telecommunications assets. In 2022, fund managers deployed USD13.3b across 46 infrastructure equity and debt projects, accounting for 47% of total capital deployed.
- Telecommunications and renewable energy platforms saw the largest jumps in investment, with capital deployed across these strategies increasing 3x and 5x compared to 2021, respectively. Two digital infrastructure deals (V.tal and Cirion) accounted for ~20% of deal value in 2022.
- GPs and LPs demonstrated rising interest for climate-related strategies. Patria Investments, Vinci Partners, Mesoamerica, Mountain Partners Chile and KPTL are among latest fund managers to launch dedicated climate funds. In addition, Actis realized the sale of its renewable energy platforms Echoenergia, Aela Energia and Atlas Renewable Energy.
Global and local fund managers alike are financing the region’s demand for more reliable and efficient connectivity.
Private credit strategies reached new heights and continue to be one of the fastest growing asset classes in Latin America. Private credit investment in the region has increased 6x over the last five years.
- With traditional banks tightening standards for lending, demand for alternative sources of debt financing has increased in Latin America. In Mexico and Colombia, local fund managers such as Altum Capital, SURA, Alloy Capital and Promecap are filling financing gaps for SMEs. In Brazil, Jive, Siguler Guff and Starboard Restructuring Partners are among active investors providing financing for distressed assets.
- Infrastructure debt for transportation projects has also been a key driver of private credit growth. Since 2019, fund managers have deployed USD5.8b across 21 infrastructure debt deals in Latin America. Notable GPs partnering with international banks and government agencies for infrastructure debt projects include Ashmore Group, BlackRock, Global Infrastructure Partners and Union Para la Infraestructura (joint venture between SURA-IM and Credicorp Capital).
Despite a significant downturn in VC investment compared to 2021, VCs deployed USD7.8b across 1,114 deals in 2022.
- VC investment in 2022 was heavily concentrated in the beginning of the year, with 72% of VC dollars deployed in 1H 2022. Investment activity continued to slow down through 2022, with capital invested in Q4 declining 12% relative to Q3 2022.
- Seed funding was resilient through the downturn, as a growing number of local fund managers continued to invest in early entrepreneurs. For the first time on record, seed investment in the region surpassed USD1b in 2022, up from ~USD650m in 2021 and ~USD300m in 2020.
- The investment pullback was especially pronounced for late-stage financing, as global investors slowed down amid a dull exit climate and valuation concerns. Investors deployed USD2b in late-stage rounds in 2022, marking a 79%-dollar contraction compared to USD9.5b in 2021. Some late-stage startups turned to alternative sources of financing through credit lines provided by investment banks.
For more information about VC trends and activity in Latin America, check out 2023 LAVCA Trends in Tech Report. LAVCA Members have access to an accompanying Excel file with underlying data on investments, fundraising and exits.
Startups announced at least USD1.5b in credit facilities in 2022 from international and local banks, primarily to support their lending origination practices. These transactions are not included in LAVCA’s aggregate statistics.
View LAVCA’s data methodology.
For more information about private capital activity in Latin America, download the LAVCA 2023 Industry Data & Analysis Data Pack. The full PDF report and analysis will be released in early March. The latest data release includes public data and aggregate statistics on fundraising, investment and exit activity updated through December 31, 2022.
Don’t see what you are looking for? LAVCA Members can make custom data requests by emailing [email protected].
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