Latin American H1 exit activity highest in 5 years

Activity was driven in part by long-term strategic investors wanting to seize opportunities in Colombia and Brazil, the Latin American Private Equity and Venture Capital Association says.

Private equity and venture capital have seen the strongest first half of the year since 2011 in terms of exits, with total proceeds of $1.89 billion, according to data from the Latin American Private Equity & Venture Capital Association.

“Clearly there have been opportunities to sell for private equity firms, as certain types of strategic long-term investors think it’s an attractive time to invest in Latin America,” Cate Ambrose, president of LAVCA, told Private Equity International.

Activity on the exit side was driven mainly by sales in Colombia and in Brazil.

In Colombia, Grupo Sura bought back its stake in financial services firm Sura Asset Management from General Atlantic at the beginning of the year, and Tribeca Asset Management sold a 50 percent stake in City Parking, the largest parking operator in the country, to French company Indigo Infra.

These two deals accounted for 29 percent of total proceeds generated in the region. In Brazil, seven transactions generated $353 million in proceeds, according to LAVCA.

On the investment side, there were 177 deals amounting to $3.03 billion, which represented a 39 percent increase in the number of transactions.

Although the total dollar amount has gone down by 15 percent in the first half of the year compared to the same period a year ago, overall it’s still a pretty strong first half of the year, Ambrose said, adding that the decrease was due to fewer very large transactions and more mid-market deals.

Brazil remained the country of choice for private equity and venture capital firms, despite uncertainty surrounding the economic environment in the country and uncertainty related to possible consequences of the impeachment of former president Dilma Rousseff, which took place at the end of August.

Brazil saw $1.74 billion invested in 54 transactions, or 58 percent of the total amount invested, down from historically representing about two third of activity.

“There’s an enormous opportunity to buy in Brazil today if you have a long-term horizon,” Ambrose said. “Of course, you have to be careful in terms of what you’re acquiring. But we’ve seen distressed investment opportunities.”

Meanwhile, Mexico was the most active market in number of deals since LAVCA began collecting transactional data in 2008.

The country had $863 million invested through 84 transactions in the first half of 2016, or 28.5 percent of the total amount invested.

Private equity firms KKR and First Reserve were particularly active on the energy front in Mexico, Ambrose noted, but the year-on-year increase in deal number was driven by venture capital activity with 47 VC transactions compared to 11 in the first half of 2015.