Patria moves to first close with $1bn

The firm, which is 40% controlled by Blackstone, is expected to hit its hard-cap of $1.2bn by July.

Brazil-based Patria Investimentos is set to have a first close on its fourth private equity fund on about $1 billion and is expected to close the fund on its $1.2 billion hard-cap in July, according to a person with knowledge of the firm.

The first close could come by next week, the person said.

The firm has attracted a variety of limited partners from around the globe, including in the US, Europe, the Middle East and Latin America, the person said. The Latin American LPs have been committing to a “local fund” that will be included in Fund IV’s final tally.

Patria launched the fourth fund earlier this year. The Blackstone Group paid $200 million last fall to buy a 40 percent stake in Patria. The partnership allowed Blackstone’s LPs and advisors clients to take advantage of opportunities in Brazil through Patria, Steven Schwarzman, Blackstone’s chairman and chief executive officer, said when the partnership was struck.

Patria closed its third fund on $700 million in 2008. The firm could not be reached for comment. Park Hill Group is working as placement agent for the fundraising.

Patria was founded in 2003 and has about $5 billion under management. The firm, led by CEO and founding partner Luiz Otavio Magalhães, began its merchant banking activities in 1994 and started its private equity business in 1997 in association with Oppenheimer Investment Bank, which has since been acquired by the Canadian Imperial Bank of Commerce.

Patria pursues buy-and-build strategies from eight general and specialist funds. The firms’ focuses include Brazilian post-secondary education and services outsourcing.

Patria is operating in a frenetic environment in Brazil, which has experienced fast and strong economic growth over the past few years. Several firms like Blackstone have established footholds in the country, to the point where some investment advisors believe the country has become too crowded, with deal values getting too elevated.

However, one advisor who operates in Brazil told Private Equity International during a prior interview despite its popularity, Brazil is a huge country that is still in the early days of its economic evolution, making any talk of a capital bubble premature.