Private equity and venture capital firms committed US$8.9b through 233 investments in Latin America in 2013, representing a six-year high and a 13% increase over 2012, according to data released by the Latin American Private Equity and Venture Capital Association (LAVCA). Activity in the last six months has been accelerated by major buyout deals in Brazil, Chile, and Colombia.
In both Mexico and the Andean countries, local GPs were able to capitalize on growing investor interest by securing new commitments from international investors and local pension funds. More than US$1b of new capital was raised in Mexico through six funds while US$1.4b was raised via Andean region funds and Peru and Colombia country-specific funds.
Overall, fundraising in 2013 was again dominated by smaller funds with 49 managers reporting 52 partial or final closings, totaling US$5.5b (versus 42 partial or final closings from 40 firms in 2012). Exits in 2013 were consistent with 2012 figures (US$3.8b), generating US$3.7b in proceeds.
“The private equity and venture capital community in Latin America has been quietly building a foundation that is capable of withstanding existing and future market complexities,” said Cate Ambrose, President and Executive Director, LAVCA. “The region continues to experience regular milestones in the face of emerging market volatility, such as this year’s record in investments, however, it will be important to see how global LPs respond once some of the billion dollar plus funds reenter the market.”
Investments in the oil & gas sector dominated in 2013, including major deals in oil & gas infrastructure. Overall oil & gas captured 18% of the US$8.9b total. It was also the sector with the highest average ticket size. Twelve deals deployed roughly US$1.6b in new capital.
Additional findings include:
- Private equity managers continued to market funds that reflect the mid-market opportunity (closings below US$600m).
- Brazil again dominated in fundraising and investments for the region, capturing 43% of the total amount raised during the period and 68% of the total amount invested.
- Capital raised by Mexican managers will allow them to target new opportunities generated by reforms.
- In Colombia, managers invested US$1.1b through 20 deals, a record figure for that market. Activity in the country was driven by four oil & gas deals that contributed 72% of the capital deployed.
- Continuing a 5-year growth trend, nearly half of all deals were in IT-related sectors, supported by VC activity in the region.
- Consumer/retail continued to be a relevant theme among private equity investors, both in terms of dollars and deals.
- There were eight PE-backed IPOs in three key markets (Brazil, Mexico, and Chile) via four different stock exchanges.
The full report will be made available free to LAVCA Members in March.