(WSJ) Fundraising for private equity investments in Brazil appears set to pick up after two lean years, although currency volatility and a still weak economy have some funds thinking twice about plunging money into companies.

Three major investment firms– Gávea Investimentos of J.P. Morgan Chase& Co, Patria Investimentos and the Carlyle Group–have started raising capital to invest in Brazilian companies, according to people familiar with the firms’ plans. The three firms declined to comment on their fundraising activities.

Total fundraising could rise again after a couple of meager years, but is likely to be well below the record $8 billion raised in 2011.

“My perception is that today it’s more difficult to raise funds due to the economic scenario. With the shift in U.S. monetary policy, we see money flowing to that country,” said Fernando Buso, the private equity director atBanco Bradesco SA, the country’s second largest private-sector bank by assets. Bradesco recently raised 2 billion Brazilian reais ($910 million) for a private equity fund, but Mr. Buso said it would be much harder to do that now.

Private equity is undergoing a transformation in Brazil, with investors taking on much larger deals and looking at new sectors, while funds are starting to buy stakes from other funds, a common practice in other markets. Private equity money is also playing an increasing role in mergers and acquisitions, going from close to 10% of the transactions in 2008 to a slightly more than 20% in 2013, according to Daniel Wainstein, country head of investment bank Greenhill & Co. Inc. in Brazil.

Private equity funds have raised about $13.9 billion for Brazil since 2011, while spending about $15.9 billion, including assets raised before 2011, according to the Latin America Private Equity and Venture Capital Association, or Lavca. Investments have been gradually rising, totaling $6 billion in 2013, compared with $5.7 billion in 2012 and $4.2 billion in 2011, according to Lavca.

While equities have been in the doldrums for some years, the sharp depreciation of the Brazilian currency, the real, which has fallen 10% against the U.S. dollar in the past year, has made local companies cheaper for foreign investors. Currency volatility remains a risk, nevertheless.

Funds are also facing more difficulties raising money than they did some years ago, when investors were euphoric about Brazil’s growth prospects and the booming middle class. The economy bounced back quickly from the 2008-2009 global crisis, growing 7.5% in 2010, but since then growth has averaged just about 2% a year.

A splurge in government spending, meanwhile, has weakened Brazil’s fiscal accounts and helped push up inflation.

U.K.-based private equity firm 3i decided earlier this year not to make new investments in Brazil and to shelve plans to raise a fund dedicated to the country, citing the deterioration of the domestic economy.

“Brazil remains a really interesting market, but conditions have changed over the last 12 months,” Julia Wilson, group finance director at 3i, said in January. “There’s much greater market and political uncertainty, and that’s also been reflected in the currency volatility.”

U.K.-based private equity firm Apax Partners plans to invest part of a $7.5 billion global fund in Brazil, looking to deploy between $100 million and $500 million in each company it invests in, although the firm wants to see the government address economic issues.

“If we see a deterioration of various factors, the company might decide this is not the time to invest (in Brazil),”said Walter Piacsek, head of Apax Partners in Brazil and Latin America.

Others are more convinced. U.S. private equity firm KKR & Co. LP this month announced its first direct investment in Brazil, buying a controlling stake in data-center firm Aceco TI for an undisclosed amount.

“We opened our office in Brazil one year ago and now we decided to invest. We analyzed more than 100 companies before opting to invest in Aceco,” said KKR general director in Brazil, Jorge Fergie.

In a sign that private equity remains good business, Kinea Investimentos LTDA, the private equity arm of Itaú Unibanco Holdings SA, Brazil’s largest bank, recently sold its 22% stake in English-language training company Grupo Multi for around $720 million to Pearson PLC. The investment yielded an annual return of 28% over three years, according to Cristiano Lauretti, head of Kinea.

A group of doctors that runs one of Brazil’s largest medical diagnostics firms, Fleury SA, meanwhile, is in exclusive talks to sell its shares to J.P. Morgan’s Gávea. Publicly traded Fleury has a market value of around $1.3 billion, so the controlling shareholders’ 41.2% stake would be worth around $536 million.

The race for Fleury involved several local and international funds, according to people in the industry.v

Christopher Meyn, a partner at Rio de Janeiro-based Gávea, declined to comment on any specific deals and fundraising, but said that the Brazilian market is at a good point at the moment: neither too hot nor too cold.

“In a crisis, owners don’t want to sell because they’re unsure of the real value of the business,” Mr. Meyn said. “When the market is very hot, companies can easily do IPOs (initial public offerings) and prices go up.”