Private Equity – Brazil (OKTOFINANCE)
Private Equity investment in Brazil really kicked off during the privatizations in 1996/97 but this initial investment cycle slowed down significantly by the end of the 90´s. Investments only started to flow back into Brazil by 2004 when the country sustained economic stability.
Since 2004 Brazil has attracted the attention of several foreign Private Equity firms, however if we consider the potential of the Brazilian market it is clear that there is still huge untapped opportunities.
By the end of 2008 Private Equity firms had invested approximately US$ 27 billion in Brazil whilst in 2007 the volume was just under US$ 17 billion. Out of the total invested in 2008 nearly 60% was from foreign investors.
Over the last few years Private Equity firms have been investing in a number of sectors throughout Brazil, however IT, biotechnology, telecommunications, agribusiness and energy has seen considerable amount of investments.
Brazil over the past few years has seen an increase for consumer credit which has led to high levels of spending in several sectors. This has in return forced several businesses to expand their operations in order to cope with an increased demand.
For Brazilian companies debt is still very expensive and mainly short term, listing companies in the stock exchange is expensive and some companies have not yet achieved the adequate size, therefore PE/VC equity financing is an opportunity.
In a recent survey conducted by Empea (Emerging market Private Equity Association)
David Denton
OKTOFINANCE
