Institutional Investors See Value in Current Latin American Private Equity Deal Environment

• Direct investing in Latin American private companies by institutional investors set to rise
• Latin American LPs intend to double their private equity exposure to Latin American infrastructure
• International LPs plan to grow their private equity holdings in real assets

Half of investors in Latin American private equity believe that low entry valuations and good availability of dealflow within the continent are attractive compared with other emerging markets, according to the annual Coller Capital/LAVCA Latin American Private Equity Survey.

The Survey confirms the trend toward more direct investing by LPs (i.e., proprietary investments into private companies and co-investments alongside GPs). Just over two thirds (68%) of LPs expect to have direct investments in Latin American private equity in three years’ time, compared to only 42% who currently have direct exposure.

Private equity investment in ‘real assets’ is an increasingly popular area. Some 41% of Latin America-based LPs have private equity investments in the continent’s infrastructure today, but 88% of them expect to do so within three years. Latin American investors also intend to add to their private equity holdings in timber, real estate, mining, and farmland assets.

Within the same three year timeframe, at least twice as many international LPs will have private equity exposure to real estate, infrastructure, timber and farmland in Latin America as is the case today – though fewer are targeting increased private equity exposure to Latin American mining assets than their local counterparts.

The pace of new commitments to private equity will remain strong in the coming year, with 95% of Latin American LPs planning to increase their commitments to the asset class. Pension funds in Brazil, Chile, Colombia, Mexico, and Peru manage roughly US$770b.

Coller Capital’s CIO Jeremy Coller commented: “Investors are signalling continued growth for private equity in Latin America. Their positive outlook is reflected in the attractive returns they expect, both from the region as a whole and especially from the less developed private equity markets of Colombia, Mexico and Peru.”

LAVCA President Cate Ambrose said: “As the private equity ecosystem in Latin America continues to mature, we are seeing greater and more sustained interest from local and global institutional investors. Despite current negative macroeconomic trends in the region, investors are taking a long-term view of the market and putting money to work in recession-proof sectors.”

Pan-regional funds are the most popular access route to Latin American private equity, with two thirds of international LPs, and just over half of Latin American LPs, expecting to be committed to pan-regional funds within three years. In the same time period, 64% of international LPs expect to commit to Brazil-focused funds.

Additional Survey findings:

The 2015 edition of the Survey also charts investors’ views and opinions on the following aspects of Latin American private equity:

• Opportunities and challenges in investing
• Return expectations
• Exit routes
• Popular investment strategies
• Attractive industry sectors
• Influence of ESG factors on LP investment decisions

Rory King:
+44(0)7917086227
Montfort, London
[email protected]

Caitlin Mitchell:
+1 (646) 315 6737
LAVCA, New York
mailto:[email protected]

Notes to Editors

• LPs (Limited Partners) are investors in private equity funds
• GPs (General Partners) are private equity fund managers
• Private Equity (PE) is used as a generic term covering venture capital, growth capital, buyout, and mezzanine investments.
• ‘International’ investors in this survey are defined as LPs headquartered outside Latin America.
• Coller Capital and LAVCA’s Latin American Private Equity Survey is a unique snapshot of trends in Latin American private equity – an annual overview of the plans and opinions of institutional investors in private equity funds. These investors, based in Latin America, North America, Europe and Asia-Pacific, form a representative sample of LPs investing in Latin American private equity .
• • This Survey captured the views of 113 private equity investors from around the world in June-July 2015. The Survey’s findings are globally representative of the LP population by: investor location; type of investing organisation; total assets under management; and length of experience of private equity investing.

About Coller Capital

Founded in 1990, Coller is headquartered in London, with additional offices in New York and Hong Kong. The firm’s multinational investment team – the world’s largest dedicated to secondaries – has a truly global reach.

Coller Capital invests across the size range of secondaries transactions: from single LP positions in small private equity funds, to large portfolios of diverse assets; from investments as small as $1 million, to transactions of $1 billion or more.

In 2012, the firm closed its sixth fund, Coller International Partners VI, with capital commitments of $5.5 billion and backing from almost 200 of the world’s leading institutional investors.

Coller’s name is synonymous with the development of the secondaries market. In 1994, the firm launched Europe’s first secondaries fund; then in 1998 closed the first such fund with a global mandate. In 2000, the firm acquired NatWest’s $1 billion private equity portfolio from the Royal Bank of Scotland – the largest secondaries investment of its time – then repeated the feat in 2004, when its purchase from Abbey National became the largest unsyndicated secondaries investment of its time.

Investments in the last few years have included: transactions with the quoted private equity businesses SVG Capital and 3i; the acquisition of two $350m+ portfolios from Crédit Agricole; the purchase of a $1.9bn PE portfolio from Lloyds Banking Group; the creation of a $400m fund to acquire direct assets from Credit Suisse; and the purchase of a €175m portfolio of funds and directs from Monte dei Paschi di Siena.

In 2011, Coller Capital won Private Equity International’s ‘Secondaries Firm of the Year’ title for the 8th successive year. In 2012, Real Deals named the firm ‘Secondaries House of the Year‘. And in both 2013 and 2014, Financial News named Coller Capital ‘European Secondaries Firm of the Year.’

For more information about Coller Capital, visit the firm’s web site at: www.collercapital.com.

About LAVCA

The Latin American Private Equity & Venture Capital Association (LAVCA) is a not-for-profit membership organization dedicated to supporting the growth of private equity and venture capital in Latin America. LAVCA’s membership is comprised of over 160 firms, from leading global investment firms active in the region to local fund managers from Mexico to Argentina. Member firms control assets in excess of US$60 billion, directed at capitalizing and growing Latin American businesses. For more information, visit www.lavca.org.

For more information visit www.lavca.org.