By Shanny Basar
eFinancialNews

March 22, 2012 — Private equity and venture capital firms investing in Latin America raised a record $10.3bn in 2011, overtaking the previous all-time high set the year before by nearly a third.

The Latin American Private Equity & Venture Capital Association said yesterday in its 2012 Lavca Industry Data report that last year beat the previous fundraising record of $8.1bn set in 2010.

Funds focusing on Brazil attracted more than $8.1bn of the total committed to the region with local firms Gávea Investimentos, Vinci Partners, BTG Pactual and Patria Investimentos capturing $7.3bn.

Cate Ambrose, president and executive director of Lavca, said in the report: “While Brazil funds captured the greatest amount of committed capital in 2011, we continue to see a healthy appetite for other regional markets.”

She gave the example of firms such as Linzor Capital Partners and Victoria Capital Partners raising regional funds for deals in multiple countries and large Brazilian firms also expanding into Colombia, Chile, Peru or Mexico.

BTG Pactual, the Brazilian investment bank and asset manager launched by former UBS executive André Esteves, in February acquired Celfin Capital, a Chilean brokerage which also operates in Peru and Colombia

However although fundraising increased, the number of deals remained the same as in 2010, and capital invested fell 10% to $6.5bn in last year from $7.2bn in 2010 according to Lavca.

Marcelo Di Lorenzo, head of Brazil for UK private equity firm 3i Group, told Financial News in January that although competition had increased it was still less than in markets such as China or India and that it is difficult to find teams with a lot experience in Brazil. Di Lorenzo also said that although fundraising has increased there is still only a small amount of capital invested in private equity given the size of the Brazilian economy.

The number of private equity-backed exits did rise last year with 53 exits in the region valued at $10.6bn, a 204% increase from 2010 according to Lavca. Exits included the high-profile $1.4bn listing of Argentina’s Arcos Dorados, the operator of McDonald’s franchisees in the region, on the New York Stock Exchange.

Venture capital firms Capital International and DLJ South American Partners had acquired a stake in Arcos Dorados in 2007 according to Dealogic, the investment banking research provider. DLJ South American Partners subsequently sold another $978m Arcos Dorados shares last October.

Early stage and seed/incubator deals saw an increase in both the number of deals and capital invested compared to 2010. Lavca said: “US and international venture capital firms have moved into the region with a proliferation of early stage deals during 2011 including investments by Accel Partners, Redpoint, General Catalyst and Tiger Global Management in Brazilian start-ups.”

The sectors which attracted the most deals and capital were information technology, energy, and other services which includes fast food chains and franchise businesses.