Performance of Brazilian Private Equity and Venture Capital Deals (1984-2022) (Spectra Investments)

Summary

• The study analyzed 1334 divested Brazilian PE and VC deals between 1984 and May 2022, comprising 586 tech deals and 748 non-tech deals.p.4
• The Brazilian PE and VC industry achieved an overall average gross MOIC of 5.8 in BRL and 2.8 in USD.p.2
• Tech exits registered an average gross MOIC of 7.9 in BRL and 5.1 in USD, with 43% of exits suffering total losses.p.2
• Non-tech deals delivered a gross average MOIC of 5.8x in BRL and 2.8x in USD, with 13% resulting in total losses.p.3
• Sales to strategics represented the largest exit channel, accounting for 50% of total exits across the sample.p.3
• Write-offs made up 32% of total exits, with tech deals accounting for 51% of write-offs versus 16% for non-tech.p.3
• Non-tech IPOs generated an average gross IRR of 41% and a gross MOIC of 4.5, while Brazilian tech IPOs achieved an IRR of 55% and MOIC of 5.2.p.3

Key insights

1. The average gross MOIC for Brazilian PE and VC deals was 5.8 in BRL and 2.8 in USD.p.2
2. Tech deals exhibited high performance concentration, with 14% of tech deals explaining 85% of the average gross MOIC.p.15
3. Outliers among non-tech deals accounted for 12% of the sample and generated 42% of the total average MOIC.p.16
4. Sale to strategics was the predominant exit path for both tech and non-tech deals, making up 50% of all exits.p.17
5. Tech exits via IPO took an average holding period of 10.3 years, compared to 4.5 years for sales to strategics.p.19
6. Sponsor-to-sponsor exits in the tech segment delivered top-tier returns, with 40% achieving a MOIC greater than 10x.p.22
7. Buybacks in the tech segment suffered high write-off rates, with 88% resulting in losses.p.22
8. PE-backed IPOs outpaced the Ibovespa index in one-year adjusted returns across 42 examined deals from 2019 to 2021.p.27