Brazil boosts Latin American private equity

The country’s private equity industry is helping the region close the gap between Latin America and Asia, market participants said yesterday at an ABVCAP conference in Rio de Janeiro.

Brazil represents 60 percent of Latin American private equity funds and dominates the region’s investments and exits, according to Roger Leeds, board chairman of the Emerging Markets Private Equity Association.

He told delegates yesterday at the Brazilian private equity association’s conference in Rio de Janeiro that the country’s fundraising totals have risen dramatically, from $4.7 billion in 2003 to $59 billion last year. That growth is helping the region close the emerging markets gap between Latin America, the third most popular region, and Asia and Russia/Eastern Europe, respectively the most and second most popular emerging markets, Leeds said.

Patrice Etlin

Advent International’s Patrice Etlin, who launched the mid-market firm’s Brazil activities in 1997, also noted that Brazilian private equity is strong and growing, with private equity-backed companies representing 36 percent of aggregate initial public offerings value since 2004.

Though credit market dislocation is now affecting capital markets activity, Etlin said local banks remain strong and are regularly providing loans of up to $150 million.

Deal flow remains robust, transaction sizes are increasing and valuations are on the rise, with many large deals now in the 7x to 9x range, he added.

Last year, Brazil attracted some $4.7 billion in private equity investments, a 262 percent increase over the previous year, according to EMPEA data.

Marcos Rechtman, an executive from Brazilian investment bank Banif, said 2008 is expected to be yet another record year. The ABVCAP 2008 Conference, which focussed on investment, energy and infrastructure, concludes today.

Arleen Buckley reported from Brazil.