Private Equity - Industry - South America Market, Share and Trends 2023-2028

Summary of Private Equity

The private equity (PE) industry in South America has seen increasing growth over the past 5 years as macroeconomic conditions stabilize across markets like Brazil, Colombia, Chile and Peru. South American PE fundraising hit a record $10.4 billion in 2021, a 30% increase over 2020. Key factors driving investor interest include: political reforms, expanding middle classes, a thriving startup ecosystem and significant infrastructure gaps presenting opportunities.

However— South American PE remains small at around 3% of global industry assets under management, as currency volatility, political uncertainty and underdeveloped capital markets pose challenges. Much of the capital flows from North American and European LPs into local fund managers with on-the-ground expertise.

Notable recent deals include Advent International and Vulcan’s $1.1 billion acquisition of Walmart’s Brazilian operations, and Riverwood Capital’s $500 million Series E raise by Colombian delivery startup Rappi.

As macro conditions improve— South American PE is poised to accelerate growth. Firms will continue targeting high-potential sectors like fintech, healthcare, consumer products and logistics while pushing companies and regulators to adopt higher governance standards to boost returns.

Recent Trends and Insights

Overseas investors like pension funds and family offices now make up over 60% of capital in South American PE – given relatively shallow local LP markets. Appetite is rising to tap into the region’s expanding consumer class and tech talent. Currency hedging options have also improved.

Brazil accounts for over 70% of South American PE given its large economy, with homegrown champions like Patria Investments and IG4 Capital leading dealmaking through deep local expertise. However— global PE powerhouses like: Carlyle and KKR are boosting Brazil exposure.

South American PE deal flow is shifting towards more early stage technology companies in sectors like fintech, e-commerce, agtech and healthtech. This mirrors the surge in VC funding into the region’s thriving startup hubs like Sao Paulo, Bogota and Medellin.

Adoption of ESG policies by both general and limited partners is growing rapidly amidst greater climate change and social impact awareness in South America. However— implementation remains a challenge with underdeveloped reporting frameworks.

Product Insights

Some PE firms run diversified funds investing across the major economies of Brazil, Colombia, Chile, Peru and Argentina. This allows mitigating country-specific risks. Examples include Patria Latin American PE funds.

Given its scale, specialty Brazil-only funds are common to allow localized value creation expertise, like – IG4 Capital’s Brazilian Private Equity funds. Sectors include: healthcare, logistics, manufacturing and technology.

Funds focused on minority-stake growth capital for more mature startups in sectors like financial services, agriculture technology and renewable energy. Examples include monashees+’ $150 million LatAm Growth Fund.

Funds that invest into South American infrastructure assets like: roads, ports, energy transmission networks and utilities, given the region’s huge infrastructure financing needs. Examples include Patria Infraestructura funds.

A nascent but growing niche as volatile operating conditions create distressed companies ripe for operational restructuring and balance sheet reoptimization. One example is Angra Partners Special Situations funds.

Key Companies

Some major players within this vast domain of industry are

• Victoria Capital Partners
• Kaszek Ventures
• Lima
• Nexus Group
• Adobe Capital
• IG4 Capital
• Vinci
• Blackstone Group
• Riverwood Capital
• General Atlantic

Regional Analysis

Brazil accounts for over 70% of South American PE given its large, diversified economy with 200 million consumers and a burgeoning startup ecosystem. However— it still faces governance challenges like corruption and red tape. Sao Paulo is the financial hub. Firms like: IG4 Capital and Vinci lead domestic dealmaking.

Colombia is South America’s rising star with abundant natural resources, an expanding middle class and business-friendly reforms. It’s startup ecosystem is thriving, benefitting tech-focused PE. Bogota is the main financial center. Key players include: Nexus Private Equity and Adobe Capital.

Chile attracts over 50% of South America’s VC investment given its stability and talent pool. However— regulatory uncertainty has dented investor sentiment recently. Santiago hosts most fund managers along with a booming fintech scene. Leading PE firms include: Ameris Capital and Moneda Asset Management.

Mining and natural resources are Peru’s main industries, but consumer and infrastructure investing are growing given pro-business reforms. High inflation and political instability are challenges. Lima is the financial capital, with Nexus Group and Camposol among top PE investors.

Argentina has huge potential with agriculture, oil & gas and tourism assets but has been plagued by financial crises and populist policies hurting investor confidence. Under President Fernandez, currency controls and export taxes have risen. Top PE firms include: Victoria Capital Partners and Kaszek Ventures.

Market Segmentation

By Type:

• Buyout funds
• Venture/growth capital
• Distressed/turnaround
• Mezzanine
• Infrastructure

By End User:

• Institutional investors (pension funds, sovereign wealth funds, endowments)
• High-net-worth individuals
• Corporations (corporate venture arms)

By Enterprise Size:

• Large Industries
• Small & Medium Industries

By Countries:

• Brazil
• Argentina
• Columbia

Our Methodology

We have offered a well-founded review of the South American regional Private Equity Industry market along with ongoing trends and upcoming projections to highlight proximate investment opportunities in this report. Moreover, an extensive analysis of any future prospects, challenges, competitors, or navigating aspects is also provided. A methodical detailed regional examination is presented.

Primary Research  

Our multi-pronged research approach includes interviews with industry leaders and a global survey of advanced manufacturing professionals to gain qualitative insights. We utilize our proprietary databases encompassing key performance indicators worldwide in order to collate relevant data points. A multivariate forecasting framework considering historical performance, current dynamics and qualitative factors are utilized to develop market sizing and growth projections through 2029.

We supplement our primary research with a careful examination of secondary materials such as– case studies, news stories and references from other sources. Organizations can benefit from the strategic advice and conclusions offered because they will be better equipped to respond to the dynamic nature of this industry and seize emerging possibilities.

We employ a comprehensive and iterative research methodology focused on minimizing deviation to provide the most accurate market estimates. Our research utilizes a combination of bottom-up and top-down approaches across segments and utilizes databases, primary research insights and industry experts for analysis.

Raw data is obtained from multiple sources and thoroughly filtered to ensure only authenticated and validated sources are considered. We collect data from raw material suppliers, industry associations, technology providers, and buyers to gain a holistic perspective.

Quantitative Analysis

Our market estimates are derived through statistical models, beginning with collection of historical data and analysis of macro- and micro-economic factors influencing the market. Gathered information on market dynamics, technology and pricing trends are utilised to build the models.

Econometric and technological models are applied to project short- and long-term market potential respectively. A bottom-up approach is preferred to minimize errors. Key parameters considered include market drivers and restraints, material pricing trends, regulatory scenarios, and capacity additions.

Weights are assigned to these parameters based on impact analysis and market forecasting is performed via statistical tools and techniques. We believe this methodology results in an accurate and realistic market picture.