(Reuters) September 20, 2011 – A unit of Banco do Brasil (BBAS3.SA), the nation’s biggest lender by assets, plans to raise 1 bln reais ($555M) for a private equity fund focused on renewable energy projects, underscoring the search for high-yielding investments in the long term.

The unit, known as BB DTVM, launched the fund in August jointly with Banco Votorantim and an undisclosed foreign investment fund, said Carlos Massaru Takahashi, president of the Sao Paulo-based asset manager, which oversees 410 billion reais in assets.

Targeted projects include windpower and biomass plants, as well as small-sized hydropower dams, he noted. The fund, which will funnel resources into the projects through a special purpose vehicle, will invest in as many as 35 projects — some of which could have an investment horizon of up to 30 years.
“This should be the first of many funds focused on infrastructure investments,” Massaru said on the sidelines of an event in the resort city of Florianopolis.

Alternative energy investments have been a favorite target for buyout firms seeking to tap Latin America’s largest economy for growth and returns. BB DTVM’s effort comes at a time when fund-raising for Brazil-focused private equity funds is expected to reach a record.

Buyout firms raised $4.9 billion in the first six months of the year, 59 percent more than the same period a year earlier, according to the Latin American Venture Capital Association, LAVCA. The group said last week that the strong results for the first half put 2011 on track to surpass the record-setting total of $8.1 billion raised from investors last year.

Brazil lured two-thirds of total Latin American fund-raising through June, LAVCA noted.
BB DTVM and its partners in the fund expect to list the fund and some of the projects, Massaru said, adding that about 15 percent of the distribution will be focused on retail investors.
Concessions and other heavy construction projects are being considered for further fund-raising efforts, the executive said.

The unit also has plans to expand in other South American nations, brokerage. Targets include shops in Chile, Colombia and Peru, he added.

Brazilian asset management firms are expanding in other South American nations including Chile, where stable economic conditions and low interest rates have drawn wealthy investors seeking to diversify their investments.

In addition, the same money managers are looking elsewhere in Latin America for complex instruments such as exchange traded funds due to a dearth of such assets in South America’s largest country.

BTG Pactual [BTG.UL], Brazil’s biggest independent securities firm, is in talks to acquire Chilean rival Celfin Capital. Itau Unibanco’s wealth management unit recently sealed a deal with Chile’s Munita, Cruzat & Claro to increase its presence in that market.

By Aluisio Alves