Private equity roundup – Latin America

With fresh capital in hand, private equity (PE) in Latin America expanded across the region in 2012.

As volatility continues throughout the global economy, Latin America has seen a deceleration in growth. However, the structural underpinnings of Latin America’s emergence remain intact and continue to provide good opportunities for PE investors.

According to a recent World Bank report, more than 50 million people joined the middle class in Latin America over the last 10 years. The resulting increase in domestic spending has yielded a rich set of opportunities for PE firms.

Sectors that have seen significant PE investment over the last two years are:

  • Retail
  • Consumer products
  • Financial services
  • Health care
  • Education

In 2012, PE investors appeared to shift their focus from fund-raising. Firms raised just US$4.9b through the end of December 2012. This compared with the US$15.2b PE firms raised in 2011.

Many of the region’s largest PE players raised funds during that time, including Gávea Investimentos, Vinci Partners, Pátria Investimentos and The Carlyle Group.

Deal activity in the region increased as firms focused on sourcing and executing new transactions. In 2012, PE firms announced US$4.1b in new acquisitions, up from the US$2.1b announced during the entirety of 2011.

Many of these investments are poised to benefit directly from the growth of Latin America’s middle class. As 2013 begins, PE firms will continue to opportunistically pursue interesting investments throughout the region.

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