RIO DE JANEIRO - Private equity and venture capital firms last year committed $7.9 billion to invest in Latin America, a substantial jump of 21 percent over the previous year, the Latin American Private Equity and Venture Capital Association said Tuesday.
The number of investments in 2012 also grew to 237, a 37 percent increase over 2011, according to an annual report released by the association during the SuperReturn Latin America Conference, being held here.
Many of the firms are flocking to consumer and retail companies, as those sectors accounted for 40 percent of the total. Deals in information technology more than doubled in both quantity and value.
On the flip side, fundraising was cut in half, coming in at $5.6 billion compared to $10.3 billion in 2011. But the association cautioned that the decrease did not reflect a lck of appetite of international investors to commit capital to Latin America.
Rather, it indicated that money is going toward smaller funds rather than large ones, the association said. In addition, larger investors like Advent International, Southern Cross, the Carlyle Group and Gávea spent the year putting to use the capital they had raised over the last two years rather than seeking out new money.
“We do not have this phenomena in Latin America of large investors raising new funds every year as often occurs in the United States,†Patrice Etlin, Advent International’s managing partner based in São Paulo, said in an interview with DealBook.
Despite the drop in fundraising, 42 funds were raised in 2012, compared with 35 in 2011, suggesting that the smaller funds were gaining prominence.
Mr. Etlin, who is also the assoc! iation’s chairman, said that he expected a similar pattern this year, where Latin America would have an increase in new investments but not in fundraising.
Despite the economic malaise in Brazil, the country attracted the most money, accounting for $5.7 billion of the total amount.
Brazil, as it has in past years, lead the region in receiving investments, 72 percent of the total amount invested and 62 percent of the number of deals.
Mexico had no appreciable increase in number of deals but total dollars committed grew by 50 percent. Still, by comparison, Brazil accounted for 147 deals representing $5.7 billion in investments, while Mexico had only 21 deals for $684 million.
Mr. Etlin seems many positive developments in Mexico, but said that he still expected that this year, “Brazil will be the main destination for investments.â€
“It will be a very strong year for Brazil, particularly if valuations start to get more reasonable with a deteriorating macroeconomic condition,€ he added.
