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LAVCA in the News

Investment Firm Raises New $2.1b Fund for Latin America

7 November 2014

(Dealbook) RIO DE JANEIRO — The investment firm Advent International said on Thursday that it had completed raising a new $2.1 billion private equity fund for Latin America, a sign of investor confidence in the region.

The Advent Latin American Private Equity Fund VI is thought to be the largest such fund ever raised for Latin America, topping Rio de Janeiro-based Gávea Investments’ $1.9 billion fund, which it raised in 2011.

The total amount also just exceeded the $2 billion target that the Boston-based Advent had for the fund. It also eclipsed the firm’s last fund for Latin America, the $1.65 billion Advent Latin American Private Equity Fund V, which closed in 2010.

That fund has generated a net internal rate of return of 9.5 percent as of March 31, according to performance data from one investor, the California Public Employees’ Retirement System, known as Calpers.

Advent said in a statement that it took less than six months to raise and drew more than 60 unnamed institutional investors, including pension funds and sovereign wealth funds. It noted that half of the capital was raised from North American investors and a quarter from European investors.

Like its past fund, the new Advent fund will continue to focus on Brazil for new investments, according to people briefed on the matter. That is despite a negative reaction by many investors to last month’s narrow re-election of Brazil’s president, Dilma Rousseff.

That bearishness, however, has not spread to private equity. Advent follows other prominent firms that have raised new private equity funds this year, largely focused on Brazil.

Gavea, owned by JPMorgan Asset Management, secured commitments for a new fund of $1 billion to $1.2 billion. Sao Paulo-based Patria Investments, in which the Blackstone Group has a 40 percent stake, closed on a new $1.8 billion fund, which was oversubscribed.

The Carlyle Group has also raised about $170 million for new local fund here that it hopes will reach one billion reais (about $452 million).

Private equity firms have concerns over President Rousseff’s handling of the economy, in recession since the second quarter, and the government’s deteriorating fiscal accounts, but they still see favorable micro-trends and long-term indicators.

Moreover, now is a good time to buy companies, when both euphoria and prices have fallen, they contend.

Still, Advent’s new fund will also invest in Mexico and the Andean region, particularly Colombia, and so Brazil will face slightly more competition in the region than it did in the firm’s last fund.

The firm said that sectors it would focus on include business and financial services, health care, infrastructure, and consumer goods. It will continue to concentrate its efforts on later-stage companies and taking control of them.

The firm’s portfolio in the region includes Colombian oil pipeline company Ocensa, Brazilian apparel manufacturer and retailer Dudalina, and Cataratas do Iguaçu, a Brazilian national parks concessionaire and operator.