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LAVCA in the News

Catterton Taps Former Eton Park Executives to Run Latin America Fund

1 April 2015

(WSJ) Seeking to capitalize on the rising consumer class in Latin America, Catterton is raising its first fund focused exclusively on the region–and the U.S. firm has brought on a team of former executives from hedge fund manager Eton Park Capital Management LP to run it.

Greenwich, Conn.-based Catterton aims to raise as much as $500 million for a new pan-Latin American fund called Catterton Aimara Latin America II, according to a filing with the Securities and Exchange Commission.

To lead its official entry into Latin America, Catterton hired former Eton Park Senior Managing Director and Partner Dirk Donath as a senior partner, said a person with knowledge of the firm.

Ricardo Salmon, another former Eton Park senior managing director and partner, and roughly a dozen other former Eton Park executives will be working with Mr. Donath. Mr. Salmon has been named a partner at Catterton.

While at Eton Park, Mr. Donath was part of a group that managed illiquid investments across emerging markets, including a $200 million deal for the development of hydroelectric power plants in Chile. Before that, he co-founded Pegasus Capital, a Buenos Aires investment firm, and served as head of McKinsey & Co.’s Latin American consumer goods practice.

Catterton, which typically invests in North America and Europe, already has Latin American exposure through several current and previous investments: Bloomin’ Brands Inc. operates Outback Steakhouse restaurants throughout Brazil, while Nature’s Variety sells its natural pet food brands in Mexico. O.N.E., a maker of coconut water beverages that Catterton sold to PepsiCo Inc., originated in Sao Paolo.

Having a team that is familiar with the Latin American landscape is paramount for institutional investors who back such funds.

A 2014 survey of 131 private equity investors conducted by Coller Capital and the Latin American Private Equity and Venture Capital Association found that roughly two-thirds of those institutions were concerned about the lack of established firms in the region. A third of the survey’s participants said they would be willing to back a first time fund.

Nevertheless, limited partners are keen to continue investing in the region. Fueled by an active exit market, fundraising in Latin America rebounded in 2014, reaching $10.39 billion for the year, according to LAVCA. That’s nearly twice the $5.5 billion that was raised in Latin America in 2013.

Although well-established firms including Advent International, Pátria Investimentos and Gávea Investimentos quickly wrapped up funds last year, competition for investment dollars will likely continue to be fierce in 2015. According to data provider Preqin Ltd., there are 96 Latin American focused private equity funds out in the market seeking a combined US$20 billion.

Competition for deals also is likely to rise. Despite slowing growth in the region’s largest economy, global private equity firms have been eyeing investment opportunities in Latin America, attracted by a rising middle class, deregulation and increasingly sophisticated capital markets that can provide more exit opportunities.

Investors also are keen to capitalize on contracting valuations in Brazil, the most active private equity market in Latin America.