Vinci Partners has closed its debut fund on $1.4 billion, joining Gavea Investimentos and BTG Pactual as another Brazil-focused manager that has topped the $1 billion-fundraising mark.
The fund officially closed this month, according to Carlos Piani, co-head of private equity at Vinci. Credit Suisse worked as the placement agent for the fundraising.
Vinci was formed in 2009 by former partners of Banco Pactual’s private equity arm, who left the bank after UBS sold it in 2009. The Vinci group had managed all private equity investments done by Banco Pactual since 2001, equating to investments of more than $1.2 billion in 32 companies over four funds, Piani said.
Banco Pactual’s departing partners oversee a $640 million vehicle raised in 2004, and are managing out the remaining four companies in the portfolio, Piani said. The firm is calling this legacy vehicle Vinci Capital Partners I, and the recently closed vehicle Vinci Capital Partners II.
LPs in Fund II are a mix of global investors and local investors from Brazil, which include private institutions like insurance companies and pensions of state-backed companies. Local investors also include high net worth individuals, Piani said.
Significantly, the firm was able to avoid handing over a measure of control to its Brazilian LPs, which generally demand a more active say in investment decisions than traditional, developed markets LPs would require.
“Most of the local institutions want to participate in the investment committees and be much more influential than usual,” Piani said. Vinci was able to avoid handing over this type of control because “we have been in this industry managing capital for long periods of time … investors were interested to come on board, demand was much higher than we expected initially”.
When you're local, you have a local presence and a local network besides the banks, you have other deal flow from these relationships.
Local players like Gavea and BTG Pactual have been operating in the market for years and do not represent new competition for Vinci, Piani said. He added, however, that developed market firms would need a few years to really get footholds in the country.
“Most of these players, not all, are still not a relevant presence locally. They’re still developing their teams and assessing the Brazilian opportunity,” Piani said. “Most of their deals are coming from investment banks and investors that rely exclusively on investment banks have a harder time sourcing deals, and they compete with global firms.
“When you’re local, you have a local presence and a local network besides the banks, you have other deal flows from these relationships,” Piani said. “Locals have an advantage to source those type of deals, not always, but in general.”
Vinci has invested less than 30 percent of Fund II, including in its big, headline partnership with Burger King. The firm has struck an “master franchise” agreement with the fast food chain in which it will work to expand Burger King’s presence in Brazil from 108 stores to 1,000 “points of sale”, which could include stores or other models.
“Burger King has 108 stores in Brazil, McDonald’s has over 1,000, that’s’ where we see the opportunity,” Piani said. The firm has also made investments from Fund II in a re-insurance company called Austral and a car rental company called Unidas.