Abstract
The Brazilian market offers a wide range of alternative investment asset classes for capital allocation. The natural private equity (PE) targets are family-owned companies with resilient management team and opportunities for improving operational efficiency, corporate governance, professionalization, organic growth and consolidation. The Tech entrepreneurial ecosystem has developed considerably since 2010, and recently a breed of “unicorns” and successful venture capital (VC) cases has emerged. Bureaucracy, complex labor, tax and environmental regulation, as well as economic volatility continue to be challenging for PE and VC investors, and local knowledge is required to overcome these obstacles. A significant number of experienced managers in Brazil learned to exploit inefficiencies and execute the traditional PE model. The average PE and VC gross IRR in USD terms was 25 percent and 21 percent per annum respectively, and first and second quartile funds have consistently delivered gross IRR in USD above 20 percent per annum.
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Notes
- 1.
CIA World Factbook. Downloaded on October 20, 2019 at https://www.cia.gov/library/publications/the-world-factbook/geos/br.html
- 2.
Acronym for the five major emerging economies: Brazil, Russia, India, China and South Africa.
- 3.
Emerging Market Private Equity Association (EMPEA) 2019. Latin America Insights (Year-end 2018). Downloaded on October 20, 2019 at https://www.empea.org/research/latin-america-data-insight-ye-2018/
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Minardi, A.M.A.F., Kanitz, R., Bassani, R.H. (2020). An Overview of the Private Equity and Venture Capital Industry in Brazil. In: Klonowski, D. (eds) Entrepreneurial Finance in Emerging Markets. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-46220-8_10
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