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Private Equity and Venture Capital Fundraising Gains Momentum in Latin America

1 September 2014

PRESS RELEASE FOR IMMEDIATE RELEASE


Contact:
Caitlin Mitchell, LAVCA
[email protected]
1.646.315.6737
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Private Equity and Venture Capital Fundraising Gains Momentum in Latin America< LAVCA Data Shows Investment Activity Driven by Global Players Expanding in the Region

New York, September 4, 2014 – Large buyout firms returned to the market to raise fresh capital in the first half of 2014, generating new PE/VC fundraising momentum for Latin America. A total of US$3.5b was raised during the first half of 2014, with final or partial closings for 23 separate funds, according to data released today by the Latin American Private Equity & Venture Capital Association (LAVCA).

“In a parallel trend to 2010/2011 when record amounts were raised in Latin America, we have seen a number of large cap managers including Pátria, Gávea, Advent, and Carlyle launch new funds and secure commitments,” said Cate Ambrose, President & Executive Director, LAVCA. “This is a dynamic period for private equity fundraising and we expect year-end 2014 totals to likely reach US$8b.”

During the first half of 2014, PE/VC fund managers invested a total of US$2.57b through 93 transactions, a 10% decrease in amount from the same period the previous year.

“Investments reached a six-year high in 2013, so it is natural that managers would focus their efforts on bringing value to portfolio companies and raising funds for future investments,” continued Ambrose.

Overall, investment activity in the first half of 2014 reflected significant participation from global funds, including the first deals closed by KKR and Bain in Brazil, as well as deals closed by General Atlantic in Mexico, and Carlyle in Peru. As a result, transactions in the first half of 2014 reflected a trend of larger deals in the region, with ticket sizes over US$100m increasing by 27% from 1H2013.

While total investment numbers were down, Latin America figures prominently in the strategy of European investors, which was not accounted for by LAVCA data. UK private equity group Cinven bought Spanish headquartered Gas Natural Fenosa Telecomunicaciones (GNFT), a fiber-optic network operator in Spain and Latin America. KKR’s pharmacy chains Alliance Boots expanded to the region through an acquisition of two major retail pharmacy networks in Latin America.

Information technology (IT) was the top sector both in terms of capital invested and number of deals in the first semester, capturing 30% of the total amount of PE/VC investments. The second most dynamic sector during the first half of 2014 was healthcare, with 11 deals totaling US$696m. Of note, consumer related opportunities drove deals in the Brazilian middle market.

In the first half of 2014, VC investors in Latin America deployed US$173m through 47 transactions, reflecting a 14% increase in the amount invested compared to the same period last year.

Proceeds from PE/VC exits increased by 7% year-on-year in the first half of 2014, with 12 divestments valued at US$1.6b. More than half of the total divestment proceeds were captured by Brazil, with over US$1b generated through eight transactions, a 9% increase compared to the same period last year. Sales to local and international strategic acquirers were popular and the European appetite for increasing exposure to the region was evident with companies such as Michelin (headquartered in France), France-based Elis, and UK-based Pearson acquiring companies from PE firms in the region.

LAVCA’s 2014 Mid-Year Data and Analysis and a separate report on venture capital is available to Members and can be purchased by non-members online here.

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About the Latin American Private Equity & Venture Capital Association

The Latin American Private Equity & Venture Capital Association is a not-for-profit membership organization dedicated to supporting the growth of private equity and venture capital in Latin America and the Caribbean. LAVCA’s membership is comprised of over 160 firms, from leading global investment firms active in the region to local fund managers from Mexico to Argentina. Member firms control assets in excess of US$60b, directed at capitalizing and growing Latin American businesses. LAVCA’s mission – to spur regional economic growth by advancing venture capital and private equity investment – is accomplished through programs of research, networking forums, education and advocacy of sound public policy. More information at www.lavca.org.