Private Equity in Brazil

Mariz, Frédéric Rozeira de; Savóia, José Roberto Ferreira

doi:10.3905/jpe.2005.605373

Cited by 7 publications

(2 citation statements)

References 5 publications

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“…The PE industry is fairly recent in Brazil. Although the first PE firm was founded in the early 1980s, the development of the PE industry started with the economic stabilization and privatization program brought by the Real Plan in mid-1990s (Mariz & Savoia, 2005;Ribeiro & Carvalho, 2008). In 2017, according to KPMG and ABVCAP (2018), the accumulated committed capital in Brazilian PE was R$154.3 billion, and the capital available for new investments was R$30.7 billion.…”

Section: Private Equity In Brazilmentioning

confidence: 99%

“…It is important to investigate the quality of the PE firm before committing capital. The PE firm's track record, the experience and accomplishment of the PE partners' team, and governance procedures are important issues in the investment decision process (Mariz & Savoia, 2005). In general, the Brazilian PE industry has delivered good returns: 22% of gross IRR in US$, but with a lot of dispersion.…”

Section: Open Accessmentioning

confidence: 99%

See 1 more Smart Citation

Market Conditions and the Exit Rate of Private Equity Investments in an Emerging Economy

Minardi

Bortoluzzo

Rosatelli

et al. 2019

BAR, Braz. Adm. Rev.

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Private Equity (PE) funds are active investors. Besides providing capital, they improve the governance, operational performance and innovation of the investee companies. However, potential misalignment between the fund manager and the company owner regarding exit timing is a limitation of the model. PE funds have a finite-life, and thus they have to liquidate investments after holding them for a certain period. They tend to time the market to exploit favorable market conditions and obtain higher selling prices, and consequently, PE funds may divest before accomplishing the value creation plan. In this article, we use the hazard model to investigate the magnitude of the impact of market conditions on the exit rate of PE deals in Brazil, a volatile emerging economy, and if it increases the chances of exiting investments with holding periods shorter than two years. We analyze a sample of 470 PE deals invested between 1994 and 2014, and we investigate four variables related to market conditions: the stock market priceearnings ratio, the number of IPOs, the Brazilian real (the Brazilian currency) appreciation against the US dollar and the Brazilian interest rate. Our results show that favorable market conditions more than double the exit rate and increase the probability of quick flips.

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Section: Private Equity In Brazilmentioning

confidence: 99%

Section: Open Accessmentioning

confidence: 99%