By Joe Leahy in São Paulo and Daniel Schäfer in Frankfurt

Financial Times

(Please note: This is an excerpt of the original article. Click here to read the article in the Financial Times.)

June 28, 2011—BTG Pactual has raised the largest Brazilian private equity fund to date, adding to an expected record year for what has become one of the sector’s hottest markets.

The Brazilian investment bank and asset manager has closed its first private equity growth fund at $1.5bn, exceeding its initial target by a third after an unusually short six months of fundraising.

Private equity groups are being drawn to Latin America and Brazil in particular by the opportunities for companies targeting the region’s emerging lower middle classes.

Some $8.1bn was raised for the region last year, up 122 per cent compared with a year earlier, according to the Latin American Venture Capital Association.

The regional funds accounted for 62 per cent of total funds raised, followed by Brazil dedicated funds with 14 per cent. Most of the money in regional funds is expected to be invested in Brazil.

The surge of interest in the past 18 months includes a $1.65bn fundraising by Advent last year, and the closure of a $1.68bn regional fund by Argentina-based Southern Cross.