Brazil’s economy may be facing harder times but Marcelo Di Lorenzo, head of 3i Brazil, says the gloom is not affecting his investments.
The private equity group announced last week that one of these, Blue Interactive Group, a cable operator, has just completed two acquisitions, growing its subscriber base by 60 per cent since 3i spent R$100m on a “significant” minority stake in July last year.
Education in Brazil has been one of the hottest sectors for private equity wheeler dealers in recent years. Little surprise, then, that some are looking to cash out now.
The latest is GAEC Educação, which on Friday filed plans to raise as much as R$626m ($282m) through an initial public offering.
2012 was another bumper year for private equity wheeling and dealing in Brazil.
While fund-raising cooled following a record 2010 and 2011, deal activity in Latin America’s biggest economy continued unabated. A total 147 deals, worth $5.7bn, were struck last year, an all time high, according to data from the Latin American Private Equity and Venture Capital Association (LAVCA).
But in the world of private equity, what goes in, must (eventually) come out. Given the stalled market in Brazil for initial public offerings over the last two years, will the returns live up to the hype?
There’s nothing like talking to private equity folk to get a positive take on a country’s problems. Take the level of English spoken in Brazil, for example. According to the UK-based emerging markets fund Actis, less than 3 per cent of Brazilians speak English fluently. For most international companies in the country, it’s just one more obstacle to doing business. For Actis, it’s a great chance to make money.
It’s a story that never seems to get old – the rise of the Brazilian middle classes.
Despite the recent pessimism over growth and concerns about rising household debt, consumer companies in the Latin American country never fail to get investors excited.
Carlyle, the US private equity group, is a particular fan of the sector and on Thursday added yet another name to its bulging Brazilian portfolio.
Remember all those stories about the huge lovefest happening between private equity and Latin America?
Well, it seems like even the most sincere and ardent love affair can do with a pause every now and again.
After two years of record fundraising for the region, funds raised for private equity and venture capital investment in Latin America fell dramatically in the first half of 2012 as firms took a break from fundraising to focus on capital deployment.
With year-round sunshine and some of the world’s skimpiest bikinis, it’s no wonder Brazil is full of fitness clubs (as well as plastic surgeons and laser hair removal clinics).
But while Brazil has the second highest number of gyms after the US, it is only 10th in terms of revenue. And in the eyes of private equity investors, that means one thing: the potential for consolidation and profit.
It comes as no surprise then that BTG Pactual’s latest investment is in Bodytech, Latin America’s largest fitness chain by revenue with 33 gyms across Brazil.