An Analysis of Private Equity and Venture Capital Investments in Brazilian Companies in the Last 30 Years (Spectra Investments)

Summary

• The sample contains 556 deals in Brazilian companies, representing USD22.1 billion of investments.p.2
• VC deals are 34% of the total number but only 2% of the resources; the average PE deal is USD60 million, almost 23 times the average VC deal.p.2
• PE deals returned a mean MoM of 3.4x, more than double the VC mean MoM of 1.5x.p.6
• Outstanding deals (MoM higher than 5) are 18% of PE deals but only 5% of VC deals.p.7
• PE deals had a gross return of 34% in USD, above the IBOVESPA (14.8%) and CDI (16%) average yearly returns.p.8
• VC deals returned only 11% in USD; the total loss rate is 39% for VC and 15% for PE.p.11

Key insights

1. The average size of a PE investment per deal is USD60 million, almost 23 times the average size of a VC investment.p.2
2. Almost all VC deals correspond to funds buying a minority stake.p.2
3. Deal size is very cyclical in Brazil, as in developed countries.p.3
4. The 18% of PE outperformers explain 57% of the PE mean MoM.p.7
5. The 5% of VC outperformers explain 43% of the VC mean MoM.p.7
6. PE deals originated in 2006-2013 had exceptionally high IRR (51% to 63%) because of the shorter holding period.p.10
7. The VC ecosystem was not mature enough for multiple financing rounds, forcing funds to sell their stakes earlier.p.9