Tuesday, September 28, 2010
Private equity sees Brazil fund raising at $15 bln
* Private equity could raise $15 bln by mid-2011
* Last year, $5 bln was raised by buyout funds
* Activity gains traction, helped by strong growth.
RIO DE JANEIRO, (Reuters) - Brazil-based private equity and venture capital funds could raise up to $15 billion from investors by mid-2011, as a growing economy and increased risk taking fuel demand for investments, an industry executive said on Tuesday.
Last year, buyout and entrepreneurial investment firms raised about $5 billion. In the 12 months ending in June or July 2011, the amount could triple as local pension funds and foreign institutional investors funnel more money into Brazil, said Sidney Chameh, president of the Brazilian Private Equity and Venture Capital Association (ABVCAP.)
Chameh's remarks come a day after Advent International, the U.S. private equity firm, raised the largest ever Latin American buyout fund. The firm, led by Brazilian financier Patrice Etlin, raised $1.65 billion after 17 months of efforts.
"We are coming from a rough ride in markets and now that in general investors, who became more selective throughout the crisis, see Brazil as a safe haven, the obvious result should be massive fund-raising," Chameh said at the ABVCAP annual summit.
More than 40 million Brazilians entered the ranks of the middle class in the past six years and another 40 million should join by 2015, said Fernando Borges, the head of Brazil's business for the Carlyle Group, said in an interview on Tuesday.
That, coupled with huge government spending on infrastructure and a boom in agriculture and mining is helping propel growth, which could reach 6 percent this year after a 0.2 percent contraction in 2009, analysts said.
"Growth is the key. That's why we are so optimistic in terms of the fund-raising issue," said Chameh, a partner with Sao Paulo-based private equity firm DGF Investimentos.
Chameh said the industry is currently working on a plan to implement a self-regulation code. No timetable for the code was unveiled.
(Reporting by Guillermo Parra-Bernal; editing by Andre Grenon)