Private Equity Bounces Back

Private equity in LatAm, and particularly in Brazil, is set to continue growing after the global meltdown halted investor appetite. Carlyle Group co-founder David Rubenstein is bullish on Brazil as investors’ risk aversion subdues and he expects assets under management in the region to increase. Other PE professionals attending last week’s Latin American Venture Capital Association (Lavca) conference in New York agree that activity will soon heat up in other LatAm countries too. Colombia-based Altra Investments director Dario Duran, tells LatinFinance that the fundraising environment is starting to improve and that pension funds, for example, are beginning to invest as the valuations of potential targets increase, but stay below pre-crisis levels. “Before the crisis, valuations were at 7x-8x Ebitda. Things are looking better now, but multiples are still around 5x-6x Ebitda across the board. This is the time to invest,” he says. Altra, which has $180m is assets under management, focuses on Colombia and Peru, and prefers companies that cater to domestic markets. Limited partners, meanwhile, say they favor regional funds over country-specific vehicles, and plan to increase exposure to LatAm. For instance, Scott Voss, a partner at Boston-based HarbourVest Partners, says the firm, which in July made a primary commitment in LatAm fund it does not identify, plans to boost exposure to Brazil and “other LatAm countries” in the next 2-3 years. He explains the firm already invests more in LatAm than in China or India. Mexico is less favored by international firms, with Mexico City-based bankers rumoring that Carlyle for one is retreating from that market.