Fundraising

GP Investments hits the road with Fund V

Publicly listed Brazilian private equity firm GP Investments has begun fundraising for its fifth private equity fund, less than one year after closing the previous fund on $1.3bn. The firm plans to target both public and private investments.

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GP Investments, the publicly listed Sao Paolo private equity firm, has begun marketing its fifth fund, GP chief financial officer Allan Hadid said on the firm’s second quarter earnings call.

The firm closed Fund IV on $1.3 billion in October 2007. GP began marketing the fifth fund when the previous fund became 75 percent invested, said Hadid, who declined to state the fund’s target.

If additional capital is needed before Fund V becomes available, GP has $600 million (€405 million) on its balance sheet available for acquisitions, said Hadid. Those investments could then be transferred to a fund at a later date or remain on the balance sheet.

Going forward, GP will look to both the public and private markets for investment opportunities.

“Since the market started having problems last year, we started to see valuations on the public market be attractive not only in absolute terms but compared to some of the private situations we are looking at,” said Hadid.

In May, GP agreed to invest R$259 million ($155 million; €100 million) in publicly-listed Brazilian post-secondary education institution Estacio Participacoes.

The private market in Latin America also remains “unexplored”, said Hadid noting that family-owned companies and multinationals exiting the region offer attractive investment opportunities.

Fund IV was the first GP fund able to invest regionally and had the capability to invest up to 25 percent outside of Brazil.

GP is actively looking at Peru, Columbia, Chile, Argentina and Mexico for investment opportunities. Mexico, where GP opened a small research office last year, is a key geography for the firm going forward.

“In the next 10 years, Mexico will be very important in GP’s strategy as we see a lot of family owned companies, just as in Brazil in the 80s, that will need to change their management,” said Hadid. “We are not there for making a deal next month, in three months, in one year; this is a long term strategy.”

GP Investments is publicly listed on the Brazilian and Luxembourg Stock Exchanges and was one of the first private equity firms to go public. The firm reported net income in the second quarter of 2008 totaling $178.6 million, a 209 percent increase compared with $57.8 million reported in the same quarter of 2007.