Kinea raises $490m for Fund II

The private equity affiliate of Brazil's Banco Itaú raised parallel structures to avoid giving Brazilian institutional investors the power to veto deals.

Kinea Investimentos, the alternative investment manager affiliate of Brazil’s Banco Itaú, has closed its Kinea II Private Equity fund on R$1 billion (€377.5 million; $490 million), partner Cristiano Lauretti told Private Equity International.

The firm raised the fund through parallel structures, segregating its Brazilian institutional investors into a R$800 million vehicle and its domestic high net-worth individuals into a separate R$200 million vehicle, Lauretti said. 

Brazilian institutional investors typically hold seats on private equity funds’ investment boards, which gives them an unusual amount of power compared to LPs in other vehicles. Kinea’s separation of its LPs into two groups through the parallel structure allows the firm’s investment team to bypass its institutional investors in the event they turn down a prospective deal, Lauretti said. 

“In the smaller vehicle, we have high net worth individuals who invested a small amount,” he said. “But their real [ambition] is to invest in larger vehicles.”

To accommodate those ambitions, Kinea will allow those LPs to co-invest alongside the R$200 million vehicle on a deal-by-deal basis.   

At first, the firm considered marketing its most recent vehicle abroad, Lauretti said. However, in his experience, international fundraising typically takes 18 months to two years, and with the firm still relatively new: “If we did that, we’d either lose focus on new investments or fundraising.”

When Fund II is approximately 75 percent invested, the firm will hit the fundraising trail again, at which point it will assess the possibility of marketing its vehicles abroad.

Kinea anticipates completing between six to eight acquisitions through its second fund over the next three to four years, Lauretti said. 

Kinea launched in 2009, after several of the firm’s team joined from AIG Capital Partners, Lauretti said, adding that the “backbone” of the team has been working together for 13 years. The firm raised R$500 million through its previous vehicle.