South America remains a popular region among private equity investors. With the region’s growing middle class and resulting emerging energy industry and sizeable infrastructure development needs, private equity deal flow, fundraising, and investor demand are likely to continue increasing. In Preqin’s H1 2012 survey, 23% of LPs indicated that South America presented attractive investment opportunities, with 25% directly referencing Brazil as an attractive market within emerging economies. Similarly, in our mid-2011 survey 28% of LPs quoted South America and a further 19% stated Brazil was offering the best investment opportunities within emerging markets.
There are currently 69 private equity funds seeking capital commitments with a geographical focus that includes South America, targeting an aggregate $39.2bn. Twenty-three of those vehicles focus solely on investments in South America and are looking to raise $5.8bn in total.
One of the largest funds in market with exposure to South America is Astra Natural Resources Fund, currently targeting $1bn. The vehicle looks to make investments in the oil & gas, mining, timber and natural resources sectors in Brazil. Another Latin America-focused fund, Angra Partners Fund 2, is seeking $500mn in commitments. It aims to make investments in medium size companies which are headquartered in, have a majority of their assets in, or derive a majority of their revenue from Brazil.
With an increasingly crowded fundraising market in South America, it is important that investors are able to determine the most important information on which fund managers are raising these vehicles, their background, and their historic performance. South America’s increasing prominence in the global economy and private equity markets will likely provide new opportunities for those seeking to gain exposure in the region.