Latin America Sees Surge in PE Fundraising

New data confirms what observers of the Brazilian venture and private equity scene have long been saying: There’s a lot more investment capital going into the region and a lot more exits too.

Fundraising last year by private equity and venture capital firms investing in Latin America reached a record of $10.3 billion, according to data released today by the Latin American Private Equity & Venture Capital Association (LAVCA).  That marks an increase of 27% from the $8.1 billion raised the previous year, which at the time was also a record.

Brazil-dedicated funds captured more than three-fourths of the money raised. Of that, the majority raised went to four local firms — Gávea Investimentos, Vinci Partners, BTG Pactual and Patria Investimentos.

Regional Latin American funds accounted for $1.1 billion of total capital committed, according to LAVCA. The total included a pan-South American fund raised by The Carlyle Group, with $776 million in commitments. Other private equity firms raised more broadly targeted emerging markets funds of which a portion will go to Latin American investments.

Cate Ambrose, LAVCA’s president, said she’s also seeing more appetite for regionally-focused investment funds. A handful of firms, including Linzor Capital Partners and Victoria Capital Partners are raising regional funds, she says, while some of the large Brazilian firms are also expanding into Colombia, Chile, Peru or Mexico.

Exits also surged in 2011, according to LAVCA, with 53 PE-backed exits valued at $10.6 billion, a 204% increase from 2010. The region saw a number of high-profile IPOs in the first half of last year, including the New York Stock Exchange debut of Arcos Dorados, the larger operator of McDonald’s Franchises in Latin America. Market conditions in the second half of the year, however, were more volatile with fewer IPOs and strategic sales remaining the preferred exit strategy.

One area did see a slowdown as well: new investments. Overall, the number of deals was on par with 2010, but the amount of capital invested was down 10% year-on-year, totaling $6.5 billion in 2011, down from versus $7.2 billion in 2010, according to LAVCA.

More details from the report are here.