Investors in equity and venture capital are undaunted by adversity in Latin America, according to the Latin American Private Equity and Venture Capital Association (LAVCA), whose member firms control over $60 billion directed at Latin American businesses.
“In the first half of 2015, a total of $3.6 billion was invested via Latin America private equity and venture capital, representing an increase of 39 percent compared to the same period last year,” association president Cate Ambrose said, according to comments forwarded by email by spokeswoman Caitlin Mitchell.
“The region has not seen such a strong start of the year since 2010, when $3.8 billion was invested,” Ambrose said.
The increase in investments is occurring at a time when Latin America is seeing heavy depreciation of its currencies and as economic growth has slowed.
“Concerns over the slowdown in growth or the need for ongoing structural reforms appear to be outweighed by the opportunity to invest dollars in funds that will make investments in heavily depreciated local currencies,” Ambrose said.
“PE/VC (Private Equity and Venture Capital) firms active in Latin America are putting money to work in new and follow-on deals, particularly in Brazil where an environment of adversity is creating new opportunities for investors,” she said.
Brazil, Mexico and the Andean region saw increases in investment. Brazil got $2.2 billion in the first half compared with $1.9 billion in the same period last year. Investments in Mexico surged to $978 million from $403 million a year earlier. The Andean region received $304 million compared with $265 million a year earlier.
In addition to investments, fundraising activities increased 21 percent with firms raising $4.3 billion. This comes after reaching record highs in the previous year.
“After reaching a record high of $10.4 billion in 2014, fundraising for Latin American-focused private equity and venture capital funds maintained momentum in the first half of 2015,” Ambrose said.
The first half of 2015 was the strongest first six months for fundraising since 2011, when $4.9 billion was raised, according to LAVCA, which is made up by over 170 firms from leading global investment companies to local fund managers from Mexico to Argentina.
However, looking ahead fundraising will slow in the coming months and year-end totals are expected to fall short of the record set in 2014 as managers concentrate on deploying capital.
“Investments in energy, oil and gas, and logistics in Brazil and Mexico dominated among large-cap transactions. Overall, health care was the top sector for investment with $810 million,” the association said.
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