Buyout funds raise record $8.1 bln for LatAm-LAVCA

Mon Mar 21, 2011 7:01pm EDT

* Fund-raising activity jumps 122 pct to $8.1 billion

* Brazil lands most deals; eyes set on Mexico, Colombia

* Buyout industry sees average size of deals double

By Guillermo Parra-Bernal

SAO PAULO, Brazil, March 21 (Reuters) - Buyout firms investing in Latin America raised a record $8.1 billion in 2010, more than twice the previous year, partly because of growing interest from local investors, the Latin American Venture Capital Association said on Monday.

Momentum is building in Mexico, Colombia, Peru, Chile and Argentina, where less competition for existing assets is bringing the attention of dealmakers. Brazil, the region's biggest economy, kept luring most commitments and investors last year, because of its diversified economy.

"As private equity and venture capital environments improve and political and economic factors remain favorable, we are seeing unprecedented interest from global investors looking to diversify their portfolios," Cate Ambrose, president of New York-based LAVCA, as the association is known, said in a statement.

Deals are growing in size, which indicate that private equity investors are beginning to perceive the long-term benefits of investing in Latin America. Fund-raising for Latin America's private equity industry was in stark contrast to a 7 percent decrease in funds in the United States and a 32 percent tumble in Europe.

While the number of deals closed did not change significantly from 2009, the number of deals exceeding $100 million doubled, with the average deal size increasing to about $41 million last year from roughly $19 million in 2009.

In recent years, jobs and wages across Latin America have surged, allowing millions to join the emerging middle class that is now buying everything from cars and homes to plane tickets and beauty care products.

Argentina-based Southern Cross Group and Advent International, the Boston-based private equity firm, closed the two largest funds ever raised for Latin America in 2010, capturing $1.68 billion and $1.65 billion in commitments, respectively, according to LAVCA.

About 46 percent of last year's buyouts took place in Brazil, where 76 percent of the region's commitments for private equity landed, the group said. Last year, the Carlyle Group [CYL.UL] competed two acquisitions worth a combined $1.7 billion and the Blackstone Group (BX.N) bought a stake in local fund Patria Investimentos.

Both Chile and Colombia saw a significant increase in the number of deals and amount of capital committed to companies in each country, LAVCA said.

"While newcomers are focused on Brazil, veterans of the region are targeting investments in other major markets where there is less competition, such as Mexico, Colombia, Peru and Argentina," Ambrose was quoted in the statement as saying. (Editing by Andre Grenon)

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Comments (1)
Latin American private equity firm Patria has been on a roll. Many successful investments in Latin American private companies have been made (and exited) by Patria. Tracking their private company deal flow on PrivCo (private company research site) and on PEHub.com (A Thompson Reuters blog that is very good.) Sources:
www.pehub.com
http://www.privco.com/investors/private-equity-firm/patria-banco-de-negocios

Mar 25, 2011 1:46am EDT  --  Report as abuse
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