Apr 2010. Source: AltAssets
Brazil-based private equity funds could raise up to $15bn from investors by mid-2011, driven by a growing economy and increased financial risk-taking, according to Reuters.
Last year, the industry raised $5bn, which could triple for the 12 months ending June or July 2011, with local pension funds and foreign institutional investors allocating more money to the asset class.
There are 257 funds registered in Brazil with a total of $45bn in invested assets, according to Brazilian Private Equity and Venture Capital Association (ABVCAP). According to research carried out by the association, 2009 saw an increase of 21 per cent of assets in private equity in Brazil in 2009 to 2010, with 18 institutions successfully raising funds last year.
The dominant sectors for private equity investment are innovation and technology, but the asset class features in almost 90 per cent of government programmes in the country.
Earlier this week, Boston private equity firm Advent International closed a Latin America fund on $1.65bn, the largest fund targeting the region ever raised. Speaking at an ABVCAP conference yesterday, Advent director Patrice Etlin said that Brazil’s growing middle class, lack of government debt and healthy commodity exports were all points in the country’s favour, but that “workforce productivity, a poor transport matrix and expensive ports can form a bottleneck to growth.”
According to Maria Helena Santana, president of the Securities and Exchange Commission of Brazil, one of the key challenges for the country’s developing financial sector was to make the industry more attractive to venture capital. "We have too much private equity and too little venture capital," she said.
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