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LAVCA in the News

Latin America Buyout Fundraising Seen at 3-year High -industry group

4 September 2014

(Reuters) Private equity and venture capital firms in Latin America could raise $8 billion from investors this year, the most since 2011, a regional industry group said on Thursday, which may propel fresh buyouts in infrastructure, logistics and other sectors.

The estimate from the Latin American Private Equity and Venture Capital Association come after 23 buyout firms obtained fresh capital across the region in the first half. Fundraising totaled $3.5 billion in the period, said the group, known as Lavca, without detailing year-on-year or sequential comparisons.

Last year, the private equity and venture capital industry raised $5.5 billion for their Latin American investments.

Getting new money from investors could turbocharge the buyout industry’s ability to step up acquisitions.

Private-equity buyouts neared $6.1 billion in Brazil alone last year. Carlyle Group LP, Advent International LP and Brazil’s Patria Investimentos Ltda and Gávea Investimentos Ltda were among firms that tapped investors this year for new money.

Fundraising among private-equity firms has slipped every year since 2011, when a record $10.3 billion was raised, allowing many buyout firms to refocus on investing.

A recovery in fundraising this year indicates that risk-taking is on the rise again and that buyout activity in the region, especially in Brazil, is maturing.

“This is a dynamic period for private equity fundraising,” said Cate Ambrose, Lavca’s president, in a statement.

In line with that trend, investments – or purchases of stakes using client and proprietary money – in the first half of this year totaled $2.57 billion through 93 transactions, 10 percent fewer than a year earlier, Lavca said. Investments hit the highest in six years in 2013.

According to Lavca, transactions in the first half reflected a trend of larger buyouts in the region, with deal sizes of over $100 million increasing by 27 percent from a year earlier.

Proceeds from exits grew 7 percent year-on-year in the first half, with 12 divestments valued at $1.6 billion. Brazil received more than half of those proceeds, or over $1 billion through eight transactions, up 9 percent from a year earlier.