Latin American Fundraising Slips In 2012 But Investment Pace Continues

Latin American private equity and venture capital fundraising may have slipped last year, but investing south of the border appears to have kept an active pace.

The Latin American Private Equity & Venture Capital Association is still compiling figures for 2012. But Executive Director Cate Ambrose said during a Silicon Valley appearance this week that fundraising is likely to be down significantly from 2011, when more than $10.3 billion was raised and five large Brazilian funds captured 71% of the total.

On the other hand, the year’s deal total appears to have increased from 2011, when about 174 transactions took place, and money put to work will at least match last year’s $6.5 billion, if not exceed it, Ambrose said. If this is true, deal size went down.

There are signs the region continues to draw investor interest. Seed funds and accelerators are emerging and perhaps as many as 200 fund managers are now active, three years or so after U.S.-based firms turned their attention to the market.

Firms also appear to be zeroing in on more modest funds today in the $300 million to $400 million range. And there are uneven signs of exits.

Intel Capital, an investor in the region since 1999, says it has had an exit in each recent year with the exception of 2012. Acquisitions remain common.

Companies will get on the radar screens of buyers typically before they can launch an IPO, says Managing Director David Thomas. This pattern will probably continue for the next few years, says Thomas, who also spoke at the Menlo Park event discussing opportunities in Latin America. He said he remains mostly focused on Brazil, though he has an eye on Mexico and Chile as well.

For his part, Paul Ahlstrom, co-founder of Alta Ventures Mexico, said he earned an IRR of more than 2,000% by selling portfolio company Rhomobile to Motorola Solutions in 2011.

“There are opportunities that are very unique,” he said. Ahlstrom has so far made 10 investments from the $70 million fund he raised in 2011, with three others likely to close by the end of next month.

The firm will probably go out for a new fund at the end of the year, he added.

Photo of Paul Ahlstrom taken by Mark Boslet.