PE Scents Brazil Bargain

With valuations dropping for the first time in years, Brazil is ripe for a wave of private equity deals in 1H09, provided owners can be convinced to part with assets for less. “You have good companies whose values have dropped by a factor of six or seven,” Daniel Miranda, partner at Mattos Filho Advogados, tells LatinFinance at a Brazil private equity panel in New York. “Valuations have come down so much, there is no sector that’s off limits,” he adds. Specifically, infrastructure – energy, transportation, oil and gas – are attractive, says Luiz Eugenio Figueiredo, partner at Rio Bravo Investments. All sectors offer opportunities, as long as you can find owners ready to make deals at prices they have not seen in a long while, he adds. Shortage of cash should not be as much of a problem as in other markets, finds the Thursday panel, which was sponsored by the Brazilian-American Chamber of Commerce. “There are lots of funds raised and ready to spend,” says Duncan Littlejohn, MD at Paul Capital Partners, who cites AIG, Gavea, GP and Advent as examples. First-time investors may be more challenged, especially if they have fundraising requirements. However, PE is not that levered in Brazil, Miranda explains, so financing is not as imperative as it was for acquisitions in other markets in the past few years. In fact, the overall lack of funding makes PE capital all the more attractive to local firms, he adds.