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.