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Private equity investors show renewed confidence in Latin America

Fundraising and private equity investment in Latin America set new records in 2009, according to a report published by the tax and accounting business of Thomson Reuters, under its WorldTrade Executive brand.

The Venture Equity Latin America’s 2009 Year-end Report shows that fundraising for the region reached a total of USD5.03bn in 2009, a 13.3 per cent drop in capital levels since year-end 2008.

Nevertheless, Latin America witnessed 40 fund closings in 2009, primarily in Brazil and Colombia, which represents an uptick of 60 per cent year-over-year. The report documents deals of USD2.8bn and exits worth USD3.5bn.

In many sectors, including financial services, housing and healthcare, investments were on the rise across the region, mainly due to Latin America’s middle class driving tremendous growth.

But it was in Brazil where the biggest investments were recorded, namely in the infrastructure and hospitality sectors. In January, Brazilian infrastructure group Invepar invested USD445m in Metro de Rio to support the development of Brazil’s subway system. Other known investors included Citigroup VC, Brazilian fund IIFIP and Brazilian pension fund Valia.

Also in 2009, US private equity firm The Carlyle Group bought a 64 per cent controlling stake in Brazil’s largest tourism agency, CVC Turismo, for an estimated USD250m. Brazil presently has the world’s tenth largest tourism market, and the sector is expected to grow by more than five per cent in 2010.

"One growing trend in the region has been investments in the consumer products sector, as the economy is heating up and consumer spending is on the rise," says Alyson Sheehan, editor of the report.

Much of this activity was in Brazil, where internet-related investments have increased in tandem with the growing number of Brazilians gaining access to both personal computers and the internet. Consequently, Brazil became the fifth largest computer market in the world, and private equity investments in computer software totalled USD342m in 2009. In total, Brazil had private equity investments of USD2.34bn in 2009 as compared to USD1.98bn in 2008, an increase of more than USD300m.

Areas attracting large investments in Mexico during 2009 include healthcare services, microfinance, and hospitality sectors, where investments focused on lending support to underserved markets in need of micro investments. Mexico-based venture investing increased to USD241m in 2009, an increase of more than USD110m year-over-year.

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