Patria, Backed by Blackstone, Seen Smashing $900 Mln Target of Fourth Fund

Patria Investimentos SA, which is partly owned by the Blackstone Group, is expected to shatter the $900 million target of its fourth fund, several sources say.

“The target keeps going up,” one LP said. “They will fill the $900 million easy. Brazil is hot.”

It’s not clear if fundraising has officially begun for Patria Private Equity Fund IV LP, persons said. Patria has reached out to LPs about the fund, sources said. Park Hill is the placement agent. The firm’s last fund, Patria Private Equity Fund III LP, raised around $630 million in 2007.

The only hurdle Patria may face is about its relationship with Blackstone. Last year, Blackstone acquired a 40% stake in Patria for $200 million. Park Hill is the fund placement agent owned by Blackstone. Patria–which means homeland or motherland in Portuguese–will likely face questions about their team’s motivation and future now that Blackstone owns a large chunk, a different source said.

Still, LPs are scrambling to invest in Patria. “We might not get in,” one source said.

Sao Paulo-based Patria has a “proven, superior” track record having invested in Veloce, a logistics services provider, in 2009 and Zatix SA, a vehicle monitoring and tracking company, in 2007. Patria’s third fund has net IRR of 42.2%, according to September 2010 data from CalPERS.

LPs like Patria because it has a large team but a relatively small number of deals, the second source said. Patria almost always takes majority stakes in the companies it buys, the person said. “Often in Brazil and other emerging markets, GPs settle for minority stakes,” the source said.

Officials for Patria couldn’t be reached for comment.