Rapid Economic Development in Brazil and Private Equity Funds in Market – October 2013

by Luke Goldsmith

  • 21 Oct 2013
  • PE

There are 52 funds currently on the fundraising trail according to Preqin’s Funds in Market that either focus solely on investment opportunities in Brazil, or consider the country as part of a wider geographical focus. A significant $16bn in total capital commitments is currently being sought by the 52 funds. Presently, 19 of these funds in market have held at least one interim close, garnering $5.4bn in aggregate capital so far.

With Brazil’s rate of economic development being one of the most rapid in the world, it is no surprise to see infrastructure vehicles being the fund type aiming to collect the greatest amount of capital, as the country requires vast infrastructural improvements to support the path of development. Indeed, with Brazil being the host nation of the impending World Cup in 2014 and the Olympics in 2016, the country needs to ensure its infrastructure is able to cope with the large influx of visitors. There are currently eight infrastructure funds in market, targeting $3.7bn in total capital commitments.

Furthermore, as the middle class in Brazil grows, the rising levels of wealth can be linked to an increase in ability to invest into land and property. This can be seen in the large aggregate target for the nine real estate funds currently in market, targeting $3.2bn.

The largest fund currently raising is the BTG Pactual Brazil Investment II. The fund makes buyout investments across Brazil in companies that operate in a diversified range of non-financial sectors and is aiming to raise $1.5bn. The second largest fund in market is P2Brasil II, aiming to raise $1bn. Like its predecessor, the fund a joint venture established by Brazilian fund manager Pátria Investimentos and Brazilian engineering company Promon. The fund targets greenfield, brownfield and secondary stage assets in the energy, distribution/storage, natural resources, logistics, transportation, waste management and water sectors.

So far in 2013, there have been 12 funds investing in Brazil to have reached a final close. These funds have raised $12.8bn in total capital commitments. This is already more than the 23 funds to have closed in the whole of 2012, which managed to raise an aggregate $11.3bn. The largest fund to close so far this year that invests in Brazil as well as a wider geographical focus is Brookfield Strategic Real Estate Partners (BSREP). The fund raised $4.4bn for investment in properties, commercial mortgages and real estate securities, as well as real estate operating companies, including corporate turnarounds and recapitalisations.

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