Gavea closes on $1.2bn for Brazil

The Rio-based powerhouse, led by Brazil's former central bank chief, now has $2.7bn earmarked for ‘illiquid’ deals.

Gavea Investimentos, the Rio de Janeiro-based investment firm founded in 2003, has closed its third fund, rounding up a total of roughly $1.2 billion (€775 million) for private equity and other illiquid investments in Brazil.

In a statement, co-founder Arminio Fraga, the former head of the country’s central bank, hailed the “fantastic energy” and “change of mentality” in Brazil toward a more enterprising and capitalistic business culture. The firm is also enthused by the drop-off in local IPO activity, which the partners describe as creating an ideal environment for the placement of private capital.

Gavea Investments III is a step up from the firm’s second fund, which raised $840 million in April 2007.  With the recent fund close, the illiquid strategies group now has $2.7 billion under management, making Gavea among the biggest private equity players in Latin America.

Founded by Arminio Fraga and Luiz Fraga, the firm’s illiquid strategies group is led by partner Christopher Meyn.

Gavea’s illiquid strategy includes the ability to do both traditional private equity deals as well as private investments in public entities (PIPEs). The firm, which controls capital across a number of asset classes, is nearing $8 billion in total assets under management. Gavea was founded in 2003 with an initial focus on hedge funds. A private equity arm was launched in 2006 with the raising of a $350 million Fund I.

Gavea raised the bulk of its capital commitments for Fund III from US endowments and other institutions. Earlier this year, PrivateEquityOnline reported that the Harvard Management Company – the university endowment – purchased a 12.5 percent stake in Gavea’s management company.

Among the firm’s most recent private equity deals is the backing of Azul airlines, a Brazilian budget airlines led by JetBlue founder David Neeleman.

Activity across Latin America has been heating up. Advent International recently closed a $1.3 billion fund targeting Latin America. Last year Sao Paulo-based GP Investments closed a $1.3 billion regional fund. Major private equity firms that are scouting for private equity investment opportunities in Brazil include Kohlberg Kravis Roberts, The Carlyle Group and Apollo Global Management.