Gavea nears final close for Fund V

The Brazil-based firm has been in market since last spring and is expected to raise between $1bn and $1.5bn.

Brazilian private equity firm Gávea Investimentos expects to close its Fund V on between $1 billion and $1.5 billion, according to two sources familiar with the matter.

Gávea declined to comment.

The firm launched Fund V in the spring of 2013 and could reach a final close within four to five weeks, according to one of the sources. Gávea makes both traditional private equity investments as well as private investments in public entities.

Gávea’s Fund V launch last spring coincided with Brazil-based Vinci Partners’ fundraising effort for its third fund. However, Vinci later pulled the offering after investors expressed concern that the timing was too close to its predecessor fund that closed on $1.4 billion in 2011. Gávea, which closed its prior fund on $1.9 billion in 2011, was able to continue fundraising, according to one source.

“If the fund raises less than $1 billion or more than $2 billion, it will be a surprise,” the source told Private Equity International.  

Gávea Fund V received a $40 million commitment from the Kentucky Teachers’ Retirement System, according to media reports. Other limited partners that have previously invested in Gávea funds include The Second Swedish National Pension Fund, AP Fonden 2 and Houston-based The Endowment Master Fund, according to PEI’s Research and Analytics division.

Gávea operates under a strategic alliance with JP Morgan Chase’s hedge fund unit Highbridge Capital Management. The bank reportedly purchased a 55 percent stake in the firm for about $270 million in 2010. Gávea also has a credit arm, which is currently investing an R$1 billion ($450 million, €320 million) fund, according to PEI data.

Brazil’s private equity fundraising activity has slowed recently after peaking in 2011, when 20 Brazil-focused funds raised a total of $8.39 billion. In 2013, only five Brazil-focused funds closed, totaling $783.6 million, according to PEI data.

However, a number of funds that raised capital in 2010 and 2011 have come back to market this year or are planning to return to market next year, sources previously told PEI. At the end of the first quarter, there were 39 Brazil-focused funds seeking a combined $12.16 billion.

During the first quarter of 2014, the only fund that closed in Brazil was Hamilton Lane’s debut Brazilian fund of funds, which collected R$150 million, according to PEI data.