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LAVCA in the News

Brazil Leads The Way in Active Latin America Fund Season

31 August 2010

By David Smagalla
Wall Street Journal

August 31, 2010 – While private equity activity fund-raising in the U.S. continues to lag, dipping below even last year’s dismal levels, Latin American fund-raising continues to grab the headlines, looking on pace to reach or surpass last year’s total, as the region puts its previous political and economic troubles squarely in the rear-view mirror.

Deal volume in Latin America continues to be small, but PE firms are seeing promise in the region’s untapped potential, as we wrote about in the August 2010 issue of Private Equity Analyst (see “Latin Beat Draws A Crowd As Investors Put ‘90s Hangover Behind Them”). In just the last month, we’ve reported on Buenos Aires-based Southern Cross, which expects to hit its recently raised hard cap of

$1.7 billion by early September, and Chile’s Linzor Capital Partners, who is joining forces with Palmfund Management LLC to market Linzor Capital Partners II LP with a $350 million target.

But so far much of the attention has been on Brazil, which accounted for 62% of total deal volume in Latin America in 2009, according to the Latin American Venture Capital Association. Just in the last month, we found out that Gavea Investimentos was beginning to market a $1.5 billion fourth buyout fund focused on the country and P2Brasil was rounding up its debut infrastructure fund, which targets $1 billion.

Artesia Gestao de Recursos SA is the latest firm to launch during this very busy season, marketing its first institutional fund focused on Brazil with a $400 million target, people familiar with the situation said.

Artesia Capital Management Fund II is staking out a midmarket control and growth strategy that is sector -agonistic, these people said. The firm expects to hold a final closing on the fund before the end of the year and is targeting investors in the U.S. and Europe including pension funds, family offices and fund advisers.

It’s not the firm’s first effort, though, as it raised a proprietary fund, Artesia Capital Management Fund I, in 2004 with the same strategy as its new institutional vehicle.

And with more and more funds launching in the region, the pressure will now be on for deal flow and exits to match the amount of money being raised by this and other funds in the region. It will be awhile before we see if the regional hype will ultimately prove a winning strategy for investors looking for a more profitable place to put their PE dollars.

With Sabrina Willmer