Investment

Pátria Investments Raises $1.8 Billion Private Equity Fund in Brazil

The Brazilian firm Pátria Investments has closed a new $1.8 billion private equity fund.

The New York Times
04/08/2014 16:08
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The Brazilian firm Pátria Investments has closed a new $1.8 billion private equity fund, its largest ever, in yet another sign that investors still find Brazil attractive despite the nation’s many macroeconomic challenges.

 

The São Paulo-based firm, owned 40 percent by the Blackstone Group, exceeded its $1.5 billion target, a Pátria partner, Marco D’Ippolito, said in an interview.

 

Investors in the United States provided slightly over 50 percent of the fund, representing an increase from their contribution to the firm’s last fund, which closed in 2011 and totaled $1.25 billion, Mr. D’Ippolito said.

 

The move comes as several firms are trying to raise new private equity funds to invest in Brazil.

 

Gávea Investments is near a final close of a $1 billion to $1.2 billion fund, and the Carlyle Group has raised about 375 million reais toward what it hopes will be a 1 billion real ($452 million) fund.

 

With the latest investments, private equity and venture capital fundraising in Brazil this year has already exceeded the $2.4 billion figure for all of 2013, based on annual survey data from the Latin American Private Equity and Venture Capital Association.

 

Last year, however, large firms were still investing capital rather than raising it.

 

But there are reasons for the latest optimism for Brazil’s rebound. Pátria, which has been involved in private equity since 1997 and in which Blackstone acquired its stake in 2010, said that its new fund, its fifth, was oversubscribed and could have been much larger.

 

American investors including pension funds and endowments increased their commitments this year, and Canadian investors, who sat out the last fund, showed increased interest. Allocations from Europe, however, declined.

 

Such appetite notwithstanding, Brazil continues to face numerous challenges.

 

A weekly survey of 100 economists by Brazil’s central bank showed that they pegged growth for 2014 at a dismal 0.90 percent. That is down from their estimate of 0.97 percent last week and the ninth consecutive week they lowered their forecast.

 

“Investors are more cautious these days,” Mr. D’Ippolito noted.

 

But he said that the questions he faced during fundraising were more tactical than structural, such as what would the firm do when faced with a year of high interest rates.

 

“There is recognition that the larger trends are positive, and that there has been an evolution in Brazil in terms of consumption patterns,” he said.

 

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