3i has agreed to acquire Brazilian eyeglass retailer Óticas Carol in a deal that includes R$108 million (€42.2 million; $54.9 million) in equity, the firm announced in a statement.
3i’s equity contribution for the deal came off the firm’s balance sheet, managing director and head of 3i’s Brazil office Marcelo di Lorenzo told Private Equity International. The firm’s current strategy for the region calls for investments “from the balance sheet, and then at the right time, to raise a Brazil-dedicated fund”, he added.
Neuberger Berman and Siguler Guff will co-invest alongside 3i. The company’s chief executive officer Ronaldo Pereira will “significantly” increase his equity stake in the company as part of the transaction, according to a statement.
The expectation is that OC stores, lab and royalties fees from franchisees will triple revenue in three to five years to R$200 million, and the network of franchise stores is expected to reach up to R$1 billion, a spokesperson told Private Equity International.
“This fits within our strategy in Brazil. It’s the leading company in its sector … it’s extremely well positioned to improve its national reach and national brand,” di Lorenzo said, adding that the company will benefit from Brazil’s growing middle class.
Although Brazil’s economy has slowed in recent years, di Lorenzo believes that Óticas Carol will be able to withstand a possible downturn.
“This company’s growing around 40 percent per year … that’s not dependent on credit. It’s a low ticket item, not very low, but a relatively low-ticket item,” he said. “Fashion, people feeling good about themselves, is a big motivation for the middle class.”
“Even if the Brazilian economy only grows by 1 percent this year and consumption slows, this is a sector that is highly fragmented, and there’s an opportunity to grow at double digit rates just by gaining market share.”
3i completed its first investment in Brazil in late 2011, when it acquired cable TV group Blue Interactive for $55 million.
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