Foreign appetite for PE returns in force

Brazilian private equity firms are gearing up, pointing to renewed confidence after what has been a tough year. Many PE managers are quietly saying that the industry is saturated with funds and that closing deals with owners has been tough, with companies enjoying multiple offers from investment banks and PE firms. That is especially true in the crowded larger deal space.

Santander, the new kid on the banking block, has set up a new private equity subsidiary, with R$2.1bn under management. The company is seeking investments in infrastructure particularly  in energy, roads, ports and airports as well as the oil and gas sector.

Giant Pátria, one of the foremost asset managers and PE operators in the country, is deepening its ties with Blackstone of the US. Blackstone took a 40% stake in Pátria in 2010 to help it penetrate the country and build out a footprint. The Brazilian firm has now appointed an executive to help it scout out more opportunities.

Pedro Salles, of the Unibanco family, is setting up a new kind of PE venture in Brazil, Cambuhy, and has attracted some big hitters to the new venture:  Pedro Bodin, non-executive partner at Icatu group, Marcelo Barbará, formerly of LanxCapital Investments, and Marcelo Medeiros of DLJ South American Partners. The firm is employing a new model for the Brazilian market in using individual money without tying managers down to specific investment time periods.

Meanwhile, Latin private equity fund Graycliff Partners has just announced it bought a minority stake in Medquímica for an undisclosed sum.

The approaches to building up involve new funds and new investments and underline the return of investment appetite, especially by foreigners in Brazil. The question remains whether they’ll be able to make good returns on these expensive investments in the long-term as the IPO market gives shows caution, at least from portfolio buyers.

About admin

I've been researching and writing on Brazilian financial markets, industry and economy since 2006 for a wide range of specialist media, consultancies and investors. Before that I spent over 10 years in London and New York writing for and editing magazines and journals dedicated to finance, investment and economics in developing markets, mostly for the Euromoney Institutional Investor group and Thomson Financial. Areas of coverage Below are samples of areas that I cover and some of the common themes that I investigate. Capital markets BM&FBovespa markets *capital raising trends: via equities (IPOs and secondary issuance), debt and loans *the asset management industry: legislation and coverage of the key hedge, pension and investment funds * corporate governance: how the regulator is seeking to strengthen best practice and limitations * debt markets: the nascent corporate markets, attempts to boost liquidity and new insturments. * private equity market: why this market has been so successful, who’s involved. *electronic, high frequency trading and alternative trading platforms: what does the future hold? Banking *credit: the growth of consumer and business credit and competition between banks and models *Public versus private: the role and market share of public and private sector banks and the politicization of the industry * internationalization: which Brazilian banks are expanding overseas and where * investment banking: the growth of the domestic market and who’s winning which mandates *regional banks and development banks: what role they play in the industry and how they compete Mining *licensing: the complex process of obtaining environmental, water, land and operating licenses at a state and federal level. * capacity: the feasibility and sustainability of capacity increases * financing: how miners are raising finance in Brazil and abroad *competition: the interplay Vale, MMX and junior miners *logistics: rail, road and port connections Oil and gas: the fund raising issues related to the massive of pre-salt (link) Multilatinas: Who are they and how and where they are expanding Meatpacking: Are debt burdens sustainable, what are the different business models for areas such as branding and distrbution Agriculture: How are farms consolidating, what are environmental risks, how can foreign investors be involved. IT and software: Can Brazil take on India and build a viable long-term IT industry? For more information on clients and work, please see the media and consultancy sections.
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