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Performance of the Private Equity and Venture Capital Industry in Brazil (1994-2017) (Spectra Investments)

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StudySpectra InvestmentsSeptember 201819 pages29 min readOriginal source
Key number
59.5 billion $
Total PE/VC Capital Raised in USD (1994-2017) p.4
Largest segment
72%
Firms older than 6 years p.5
What changed
4.8 x
VC Mean Gross MOIC in USD (Exits post-2014 vs pre-2015) p.9

Summary

  • The sample includes 413 funds and 2061 deals invested between 1994 and March 2018 in Brazilian companies.p.3
  • Total committed capital from 1994 until 2017 reached $59.5 billion across 149 funds and BRL 15.8 billion across 75 funds.p.4
  • Investments in Brazilian companies totaled $49.2 billion (BRL 99.7 billion) between 1994 and 2017 across 61% of analyzed deals.p.5
  • The PE/VC firms analyzed show maturity, with 72% aged 6 or more years and 40% founded more than 10 years ago.p.5
  • PE/VC deals between 1994 and March 2018 delivered a mean gross MOIC of 2.6x in USD, with maximum MOICs of 34x for PE and 60x for VC.p.8
  • Brazilian PE/VC funds raised between 1982 and 2010 posted a mean gross IRR of 22% in USD and a mean gross MOIC of 2.6x.p.12

Key insights

  1. Two-thirds of all PE/VC funds raised in Brazil between 1994 and March 2018 were denominated in USD, highlighting a heavy reliance on international institutional investors.p.1
  2. Economic crisis and local currency devaluation reduced PE mean gross MOIC in USD from 2.8x (1994-2014 exits) to 1.8x (2015-March 2018 exits), whereas the BRL impact was far milder.p.9
  3. VC deal performance surged during the economic crisis, reaching a mean gross MOIC in USD of 4.8x for 2015–March 2018 exits due to market maturation and additional funding rounds.p.9
  4. Venture Capital investments exhibited a 44% write-off rate, but top-performing deals driving up to 60x MOIC generated a overall mean MOIC of 2.3x.p.8
  5. Top and second quartile Brazilian funds rank equivalent to or higher than global performance peers on an estimated net IRR basis.p.12
  6. Brazilian PE deal holding periods averaged 4.4 years, with fund managers engaging in quick flips (under 3 years holding period) at more than twice the rate of the global industry to exploit hot market windows.p.2
  7. Over 40% of VC deals were held for longer than 5 years, signaling sustained follow-on capital commitments to help early-stage companies mature.p.17

Published by Spectra Investments (funder profile)

Topics and entities

GlobalM&A and exitsPrivate equityPrivate marketsSME finance and lendingStartup fundingVenture capital99 TaxiABVCAPBain & Co.InsperPreqinSpectra Investments

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