Edmond de Rothschild pulls South America fundraising – exclusive

The French bank's private investment arm has aborted its plans due to deteriorating economic conditions in the region.

Edmond de Rothschild Private Equity has cancelled fundraising for a regional private equity vehicle targeting the Andean region of South America, Private Equity International has learnt.

The French bank’s private investment arm was seeking $250 million for Teka Private Equity Fund II, which launched in partnership with Colombia’s Teka Capital in late 2016, a spokeswoman for the firm told PEI. Fundraising was paused soon after launch and before any capital calls due to deteriorating economic conditions in some South American states.

Edmond de Rothschild Private Equity was an investor in the fund and had been helping to raise the vehicle, the spokeswoman added. It has more than a dozen such partnerships across various asset classes, providing seed capital for fund launches, as well as advice regarding governance, structuring and investment.

Fund II moved to appoint liquidator Alium.lu in an extraordinary general assembly on 26 July, according to Luxembourg public filings.

“Due to the deterioration of the macroeconomic environment Teka and EdR decided to stop the launch of this fund and terminate the initiative,” the spokeswoman said. “The relationship with our investors was extremely positive as they appreciated our reactivity.”

Venezuela’s currency has fallen victim to staggering levels of hyperinflation in recent years, while in September Argentina launched austerity measures and vowed to abolish half of its ministries in an attempt to stabilise the plummeting value of its peso.

In 2011 Teka Capital raised $144 million for its debut vehicle, with which Edmond de Rothschild was not associated. This was below its $200 million target, according to PEI data. The Colombian firm targets companies with more than $1 million of EBITDA in Colombia, Peru and Chile, according to its website, which also reveals its portfolio comprises seven businesses in industries such as clothing, hotels and fitness.

Edmond de Rothschild Private Equity is launching a series of funds seeking at least €1 billion in total across multiple niche asset classes. The firm is expecting to raise €175 million for a “hybrid fund of funds” with secondaries and co-investment pockets, it announced at its Paris headquarters in May.