By Joe Leahy in São Paulo
September 14, 2011 — Fundraising for Latin American private equity and venture capital was up 59 per cent in the first half of the year compared with a year earlier as the large firms raised billions of dollars, particularly for Brazil.
Firms raised $4.9bn for 14 funds putting the region on track to surpass last year’s record of $8.1bn, according to the Latin America Venture Capital Association.
“As developed markets continue to languish, we are seeing an increased appetite from global LPs [limited partners] to increase their exposure in Latin America,” Cate Ambrose, president of Lavca, said in a statement.
The numbers come as Latin America has benefited from an upsurge in global interest over the past five years, with companies expected to raise about $10bn to $11bn for investment in Brazil alone in 2011, according to industry estimates
Deals include Carlyle’s first investment in the region last year in CVC Brasil Operadora e Agência de Viagens, the region’s biggest tour operator, and Silver Lake’s investment in Brazilian web-hosting group Locaweb last year.
Lavca said that of the $4.9bn committed to the region, 67 per cent was dedicated for Brazil. Brazilian investment group BTG Pactual closed a $1.6bn fund during the first half of this year, while another Brazilian house, Vinci Partners, raised $1.4bn.
In addition, local investment firms Pátria and Gávea have raised an extra $3.2bn during the third quarter of this year.
Lavca said the number of exits by firms from their investments also increased, with 33 private equity-backed exits valued at $8.9bn – more than in the full year of 2010.
Ashmore Energy International’s divestment of its Latin American portfolio accounted for $4bn of the exit total, while a number of others were done through initial public offerings.
“With 65 investments realised in the first half of the year, deal closings were on par with the first half of 2010,” Lavca said. “However, the value of deals was down 30 percent from the same six-month period of the previous year.”
Duncan Littlejohn, managing director at Paul Capital in São Paulo, said that while the volume of funds raised was positive, most of it was by a few large, well-known institutions rather than a lot of smaller or medium-sized groups.
“It’s good but it’s not the party it looks like for the industry,” Mr Littlejohn said. “It’s as hard as it always was [to raise money].”