Brazilian private equity funds with BRL 36 billion on hold

 

Survey made by Brazilian Private Equity & Venture Capital Association – Abvcap – published by the Brazilian newspaper Estado de São Paulo, shows that Brazilian private equity funds have BRL 36 billion available to invest. The closing of further deals is expected after the definition of the new Brazilian President, at the end of October.

 

The newspaper reports that investments made by private equity funds between 1994 and 2016 returned the investment 2.6 times. Current ABVCAP President, Piero Minardi, highlights that the investors are aware that, regardless the result of the election, Brazil remains as an important market. Even between the 1994 to 2016 period, Brazil was not immune to economic crisis and the forecast for the near future does not appear to be too different from the ones the investors have already faced.

 

Resources of private equity funds shall be invested in equity. Obviously, funds are not obliged to invest in any asset. There are interesting assets that, according to Piero Minardi, “are going through structural changes all over the world, such as education, health, transport and logistics, which shall be priority for all”. He mentions that in the last five years, the Abvcap funds invested BRL 22.3 billion in 140 companies of these three sectors and helped the building of success cases, like Rede D’Or (hospitals), Hermes Pardini (diagnostic medicin),  Eleva Educação (education) e 99 (app-based transport), to mention some of these companies. The opportunities are huge and on sectors with high social impact. Private capital has a very important role to develop such sectors. Fintechs is another sector in high demand. And the funds can also help unleash the infrastructure of Brazil, and would create jobs and assist on the economy recovery.

The news also notes that the capital brought by the private equity and venture capital is of long term, not speculative, enhances economic growth, formalization of the companies and generating taxes. As consequence, creates jobs, allows local entrepreneurs to increase and have access to what is going on around the world.

Once the volatility of the elections goes after October, the resources of private equity funds should be back to investments.

This is what we expect.