General Atlantic buys into optimism

Although General Atlantic has been active in the Brazilian market for nearly a decade, the firm has recently taken two major steps toward establishing itself as a major player in the country's robust private equity market.

At the end of last year, the Greenwich, Connecticut-based firm named Fernando Oliveira as a managing director and head of the Sao Paulo office. Oliveira was most recently a director at Grupo Icatu, a family office. He is supported in Sao Paulo by vice president Doug Scherrer and associate David Velez.

General Atlantic has invested roughly $700 million in Latin America since 2000 – a relatively small proportion of the $15 billion managed by the firm. But Brazil's presence in General Atlantic's portfolio looks set to grow.

Late last year the firm completed a major investment in Sao Paulo-based Qualicorp Group, a provider of healthcare benefits administration and brokerage services. The deal was led by managing director Jonathan Korngold, who heads up General Atlantic's healthcare practice from New York.

In an interview with PEI, Korngold noted the rising GDP of Brazil as well as the “near perfect correlation between per-capita GDP growth and per-capita spending on healthcare” as a key theme supporting the investment. His firm's investment in Qualicorp is a bet that Brazilian companies and individuals will increasingly adopt healthcare insurance plans. It is also a bet on Qualicorp's management, which Korngold says is “widely regarded as being among the very best teams in the Brazilian market and enjoys the respect of clients, partners and competitors alike”.

General Atlantic's detailed understanding of the Brazilian healthcare market impressed the management of Qualicorp, who now expect to benefit from the firm's global presence and long experience with other healthcare businesses in other countries.

Korngold, like his colleagues at General Atlantic and indeed many other Northern Hemispheric private equity firms, is impressed by the real changes that have occurred in Brazil's economy over the past five years. “There is great enthusiasm and optimism in Brazil right now, and it's infectious,” says Korngold.

Oliveira confirms this mood: “Having been an investor in Brazil for over a decade, I am excited about the specific momentum of the country and the many opportunities available to build world-class companies that target the domestic markets as well as expand globally.”

Roughly 19 firms are trying to raise 24 funds in the Brazilian private equity market targeting $7.5 billion in total commitments as of November 2008, according to Ocroma Alternative Investments, which provides investors with access to alternative investment in Latin America.

Brazilian venture firm FIR Capital Partners has sold its stake in Brazilian medical products and pharmaceuticals manufacturer Prodimol Biotecnologia to Orgenics, a division of US medical diagnostic products firm Inverness Medical Innovations, for an undisclosed amount. FIR Capital has been a part of the Draper Fisher Jurvetson network since 2007.

US private equity firms Riverwood Capital and FTVentures have jointly invested roughly $13million in Buenos Aires, Argentina-based software developer and IT outsourcer Globant. The financing will support Globant's organic growth and acquisition plans throughout Latin America, the US and Europe. The company currently has operations across the three regions.

Colombia-based Altra Investments has held a first close on $75 million for its debut institutional private equity fund targeting $110 million for investments in the Andean region and Central America with a focus on Colombia and Peru. The capital raised to date was committed by several Colombian institutional investors between May and November last year. The remainder is expected to be raised from international investors in the first quarter of 2009.

Citi group Venture Capital International Brazil and Brazilian fund Investidores Institucionais Fundo de Investimento em Participações have sold their stake in Oeste Participações, which manages the Rio de Janeiro underground rail system, to Megapar for 841 million reais (€275 million; $376 million). Megapar is a holding company controlled by construction group OAS and Banco do Brasil pension fund Previ.

Aureos Capital's $21 million Emerge Central America Growth Fund has made an undisclosed growth investment in Costa Rican outdoor advertising company Publimovil Costa Rica through a purchase of preferred stock. The investment was made though Publimovil Group subsidiary PL Movil, which was established in El Salvador in 2000 and owns media space throughout Central America. The capital will finance the company's expansion into Costa Rica and aid in its regional consolidation strategy.

Global private equity firm Advent International has promoted 18 members of the firm in the US, Latin America and Europe, including Latin American specialists Alfredo Alfaro and Patrice Etlin to managing partner. Alfaro joined Advent in 1996 and is a founding partner of the firm's Mexico City office. He previously spent 14 years at Mexican bank Grupo Financiero Probursa, where he became a senior investment officer in the bank's private equity group. Etlin launched Advent's investment activities in Brazil in 1997 before which he was a partner at International Venture Partners in São Paulo.