Hamilton Lane closes debut FoF for Brazil

The firm raised about $64m and has invested roughly a third of the fund to date.

Hamilton Lane has closed its debut fund of funds focused on Brazil, raising R$150 million (€45 million; $64 million), according to a statement.

The fund of funds had a target of R$500 million. HL Brazil launched in 2013 and received commitments from pension funds, multi-family offices and financial institutions. About R$56 million of the fund of funds has been invested in six deals, “diversified across vintage year, strategy and maturity”, the statement said. Additional investments will be made in the healthcare, education, natural resources, energy and essential consumer goods sectors.

After strong growth between 2000 and 2010, Brazil's gross domestic product growth fell from 7.5 percent in 2010 to 0.9 percent in 2012, according to the World Bank. Large capital inflows also caused the Brazilian real to appreciate, which hurt the country’s manufacturing industries and industrial output.

Private equity activity has also fallen as a result. In 2012, there were 80 private equity investments in Brazil with a total value of $4.58 billion, compared to 55 deals which totaled $2.78 billion in 2013, according to data from the Emerging Markets Private Equity Association.

However, strong economic fundamentals suggest there are still attractive investment opportunities for private equity firms.

“The growing middle class, improved regulatory framework and healthy global business ecosystem have laid the foundation for sound market opportunities in Brazil,” Ricardo Fernandez, co-head of Hamilton Lane’s Rio de Janeiro office, said in the statement. “We have seen entry-level prices dropping substantially since the first closing and we are capitalizing on the resulting opportunities. Given the uncertainty around the capital markets right now, Brazilian institutions are looking to partner with the right manager to help them find ways to continue to grow.”

Hamilton Lane opened its Rio de Janeiro office in September 2011 but has been actively investing in the region since 1997. The office is led by Filipe Cerqueira Caldas and Fernandez. The firm manages about $1.2 billion throughout Latin America to date.

Hamilton Lane also has offices throughout the US and in London, Tel Aviv, Hong Kong and Tokyo. The firm is in market with its third flagship co-investment fund, which launched last year targeting $1 billion.