Archive for January 5th, 2011

What Is The Best Way To Invest In Latin America? In Pan-Regional Or Country Specific Funds?

January 5, 2020

An article by Antonia Henbest

‘Brazil is the only country in which GPs can operate large country-focused funds – it’s not part of Latin American Private Equity, it’s a continent all on it’s own!’

- Brazilian GP

It can be confusing when speaking to international LPs and the Latin American GPs that they intend to invest with. The overwhelming majority of LPs who participated in our research state that their intention is to invest on a pan-regional level, whilst GPs maintain that there are few, albeit large and well-known, pan-regional funds operating in the region. How to solve this disparity? Some hints emerges in deeper conversations with the country-specific GPs, many of whom are Brazil based. They argue that in Latin America, it is much more difficult to do country-specific funds as the size of the markets varies hugely, and whereas in Asia, where one is able to choose between a variety of stable medium-sized markets, such as Vietnam or Malaysia, the Latin American market is instead divided into many very small markets, such as Chile and Peru, which lack a highly developed local GP base. LPs still wanting exposure to these markets in an attempt to diversify away from the dominance of Brazil are left with few options but a pan-regional approach. Many of these funds, with notable exceptions, such as Southern Cross, are often heavily weighted towards the Brazilian market. The Brazilian GPs maintain that this is natural as the country’s phenomenal growth rate accelerates Brazil away from the rest of the region, but will they find themselves increasingly having to make friends with their neighbours to justify receiving the warm attentions of international LPs?

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