Despite recent outflows of capital from emerging markets, private equity and venture capital in Latin America expanded by all measures in the first half of 2013, with an increase in fundraising, investments, and exits as compared to the same period in 2012, according to data released today by the Latin American Private Equity and Venture Capital Association (LAVCA). In the first semester of 2013, firms raised US$3.8b with final or partial closings for 36 separate funds. This represents a 100% increase in capital as compared to the same period last year when, US$1.89b was committed through 10 final or partial closings.
“The emergent theme in LAVCA 1H2013 data is in contrast to headlines reporting a flight out of emerging markets in response to expected policy shifts by the US Federal Reserve,” said Juan Savino, Director of Research for LAVCA. “We have seen an uptick in private equity and venture capital activity across the board in Latin America with an increasing universe of global and local investors taking part.”
The number of mid-market deals (US$25-100m) continues to grow, with nearly twice as many in Brazil in 2013 as compared to 2012. Global LPs oversubscribed mid-market funds in Peru and Colombia and have demonstrated interest in Mexico, encouraged by the government’s reform agenda. Overall, private equity and venture capital fund managers invested a total of US$2.9b (a 5% increase from 2012) through 108 transactions (a 19% increase from 2012).
The number of IT deals in Latin America was up 21% in 1H2013, while Consumer Retail saw a 44% increase, both leading sectors by percentage of total investments overall. The Energy sector was also well represented in the data with US$336m invested, up from US$126m in 1H2012.
Venture capital investments from international and Latin American VC firms, accelerators, and angels (ranging from seed to expansion) also increased in 2013, with US$151.9m across 58 deals, representing a 69% rise in capital committed and a record number of early stage deals in the region.
“The increase in venture capital activity in the first semester was driven largely by Latin American VCs and is another positive bellwether for the long-term development of the investment ecosystem,” continued Savino.
According to LAVCA’s findings, proceeds from exits were up 67% to US$1.5b in 1H2013, compared with 1H2012. Significant in 2013, Mexico saw two exits, both PE-backed IPOs, from hospitality chains during this period. The education sector was particularly dynamic, generating exits worth a total of US$572m.
The following graph provides a summary of data described in the above release.
LAVCA’s full Mid-Year Data and Analysis will be distributed to members and can be purchased by non-members online here.