Brazil PE Fund Raising Continues Despite Global Crisis

From 4/30/08 Venture Equity Latin America
Published by WorldTrade Executive, Inc.

Brazilian private equity and venture capital fund raising has continued strong in 2008, despite the global impact prompted by the US subprime crisis. For the year, Brazilian fundraising is expected to surpass the $4 billion raised in 2007. The continued interest in Brazil is a result of a series of factors, including economic stability, low inflation, a consumer credit spending boom resulting from lower unemployment and higher income levels, particularly among lower income groups. In April alone, local and international funds raised over $1 billion. Standard & Poor’s recent decision to raise Brazil to investment grade will also have an impact on fund raising, because it will allow a broader range of investors to back Brazilian funds.

AIG Raises Nearly $700 Million for Brazil Investments
The highlight of April’s fund-raising activities was the final close of AIG Capital Partners’ Brazil Special Situations Fund II, L.P. (“BSSF II”). The fund received commitments of $691.9 million, surpassing its initial fundraising target.

AIG has a superb track record of investments in Brazil and has been a leader in IPO exits. In February of 2003, AIG invested $26 million to acquire a 17% share of Brazilian low-cost, low-fare airline Gol. AIG sold its share for $220.6 million in share offerings in 2004 and 2005. In July of 2003, the fund also invested $11.6 million in Intelsat, which it later sold to Brazilian long-distance company Embratel. The fund also owns a share of Brazilian supermarket chain Sendas, which was sold to leading supermarket chain Pão de Acuçar.

Vision, Moore to Close $300 Million
Brazil Real Estate Fund
Vision, a Sao Paulo-based asset management firm, together with New York-based and Moore Capital, will hold a first close on a $300 million real estate private equity fund which will invest exclusively in Brazil. A second close on the fund is expected to occur within the next few months, according to Ken Wainer, one of Vision’s founding partners and the head of its real estate investment division.

The fund will focus on three areas, including brown-field office development, which entails the construction of new Class A, Leeds green seal certified office buildings on sites previously used for industrial or residential purposes.Vision will also be acquiring existing office buildings, which will then be retrofitted to improve infrastructure and then rented or sold. The fund will also invest in Brazil’s expanding affordable housing sector.

FAMA Holds First Close on R$250 Million Fund
São Paulo-based investment firm FAMA held the first close on its first private equity fund, the FAMA Private Equity I FIP. The final fund raising target is R$400 million, with fund raising activities taking place both in Brazil and abroad. Credit Suisse Hedging-Griffo is involved in the fund raising process.

Fama, which is best known for private investments in public shares (PIPE) investments, decided to enter the private equity market in an effort to capitalize on its experience managing companies, according to André Burger, a partner at FAMA who joined the firm after over a decade ago at Rio Grande do Sul-based fund manager CRP.

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