BTG Pactual raises record Brazil fund

BTG Pactual has raised the largest Brazilian private equity fund to date, adding to an expected record year for what has become one of the sector’s hottest markets.

The Brazilian investment bank and asset manager has closed its first private equity growth fund at $1.5bn, exceeding its initial target by a third after an unusually short six months of fundraising.

The fund will contribute to a $10-$11bn pot expected to be available for investment in the country by December, double that of last year, according to industry estimates.

Steve Jacobs, chief executive at BTG Pactual Asset Management, said: “Brazil is very much in focus, we have got investors from all over the world”.

Most of the significant private equity groups have raised or are planning to raise new funds, with Carlyle recently closing a $1bn fund whose main focus will be Brazil, marking the second year of a resurgence in the industry following the global financial crisis.

Patrice Nogueira Baptista Etlin, managing partner in São Paulo for Advent International, one of the longest established operators in the country,” said: “The money chasing deals in Brazil will be $10bn to $11bn, which will be a record.

“But that’s still a modest amount for an economy the size of Brazil’s.”

Private equity groups are being drawn to Latin America and Brazil in particular by the opportunities for companies targeting the region’s emerging lower middle classes.

In Brazil, the groups are active in sectors ranging from fast food, through companies such as Burger King, to private education, through companies such as like Kroton Educational, in which Advent has a stake. The renewed interest follows a patchy history for the industry in the country, with groups suffering heavy losses in previous bouts of investment activity.

Some $8.1bn was raised for the region last year, up 122 per cent compared with a year earlier, according to the Latin American Venture Capital Association.

The regional funds accounted for 62 per cent of total funds raised, followed by Brazil-dedicated funds with 14 per cent. Most of the money in regional funds is expected to be invested in Brazil.

The surge of interest in the past 18 months includes a $1.65bn fundraising by Advent last year, and the closure of a $1.68bn regional fund by Argentina-based Southern Cross.

This year, Gavea Investimentos, the Rio de Janeiro-based investment firm controlled by JPMorgan’s Highbridge Capital Management, is expected to raise a $1.8bn private equity fund that would be Brazil’s biggest.

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