Private Equity in Brazil
Despite Brazil’s economic challenges, the private equity market in Brazil has constantly been making its way to the top. If you’re curious or ambitious about building a private equity career in Brazil, this is the article for you.
In this article, we will explore all aspects of Private Equity in Brazil and will try to provide you with an accurate picture of Brazil’s PE market.
Let’s get started, and here’s the sequence of the article –
- Overview of Private Equity in Brazil – Overview
- Services Offered
- Top Private Equity Firms in Brazil
- Recruitment Process
- Private Equity Salaries in Brazil
- Private Equity Exit Opportunities in Brazil
If you are new to Private Equity, then do have a look at this comprehensive Private Equity overview.
Overview of Private Equity in Brazil
In the year 2014, Brazil’s economic scenario wasn’t very glorified to talk about. First, there was a corruption scandal, and then anxiousness & tension of presidential elections also got added. As a result, Brazil couldn’t grow at all as an economy.
Despite no economic growth, Brazil’s Private Equity market did significantly well. These private equity firms were able to $5.6 billion in new funds for investment in Brazil. If we compare the capital raised with the capital raised in the year 2013, we will see that there was almost a $2.3 billion increase in total capital commitment in 2014 than 2013.
The first half of 2015 wasn’t very rocky for private equity in Brazil (raised around $2.28 billion), but in the latter half, private equity firms in Brazil fell on their faces (raised only $900 million). In the year 2016, the first half didn’t do well, but now the market has been recovering. The reason for this downfall is Brazil’s former president Dilma Rousseff’s impeachment. And the process went on for around 9 months.
Private equity in Brazil may not be at its best as of now (and especially when we compare the performance of the private equity market of Brazil in the year 2011 when the PE firms in Brazil raised over $8 billion in total capital commitment), but there is a silver line in the clouds as investors all around the world have been eyeing Brazil as an emerging market and gradually have started investing.
Private Equity Services Offered in Brazil
Brazil’s private equity firms provide a lot of services to their clients all over the world. We will have a look at the top services they offer and the approach they take for serving their clients –
- Buyout: One of the most important services private equity firms in Brazil provide is the service of the buyout. In a buyout, the private equity firms buy a sum of shares from a company to have a controlling interestControlling InterestA controlling interest is the shareholder's power to speak in the corporate actions or decisions derived from possessing a considerable chunk of the company's voting stock. However, such a stakeholder may or may not hold a significant portion of the company's common stocks.. Then eventually, if the PE firm sees more growth, they try to influence the management to follow a certain protocol to generate better returns. And when the proposal doesn’t seem beneficial, then they go for an exit.
- Growth equityGrowth EquityGrowth equity or expansion capital is a form of capital investment undertaken as minority investments in relatively mature and large corporations looking forward to some structural and transformational change or a large growth prospect in future for business operation expansion, acquisition or entering a new market.: This is another top-notch service offered by private equity in Brazil. They find out companies that are in their mature stage and are looking for growth capitalGrowth CapitalGrowth Capital, also called Expansion capital, is the amount of money offered to the fast-growing businesses requiring finances to expand their operations or new market ventures. All in all, it helps facilitate target firms for accelerating their growth rate. for financing their expansion. Then private equity firms in Brazil do their due diligence, and if everything goes right, they decide to invest in the companies. And as a result, they earn a good return at the end of the day.
- Carve-out: Carve-outCarve-outCarve-out refers to the business strategy where a parent company decides to partially divest one of its business units by selling minority interests of the subsidiary to an outside investor or a group of investors. is another name of partial divestiture. Private equity in Brazil finds out parent companies that want to go for partial divestitureDivestitureDivesting, also known as divestiture, refers to the sale or transfer of the significant assets, divisions, investment of the business due to some financial, political or social reasons such as a business can sell the department which is not a core part of the business and is not providing benefits to the company so that the business can focus on the units that can provide better earnings.. And then these private equity firms assist parent companies in making the deal happen. Also, have a look at Spinoff vs. Split offSpinoff Vs. Split OffBoth spin-off and split-off are the two different forms of divestitures. In a spin-off, the subsidiary company's shares are distributed among all of the shareholders. In contrast, in a split-off, the stakeholders have to surrender their parent company's shareholding for receiving the subsidiary company's shares..
- Public to private: This is another service that Brazilian private equity companies offer. They assist the public companies to sell out their stocks to become private. This is not always feasible for public companies to find out sellers. Private companies help these public companies to find sellers who are ready to buy the shares and become private once again.
List of Top Private Equity Firms in Brazil
Brazil has a lot of great private equity firms. Not all of them have been performing them consistently. But some are. According to Leaders League, there are few private equity companies that have been maintaining their standards and performing significantly well. Leaders League calls them “leading private equity funds of 2016”. Have a look at them one by one –
- Angra Partners
- Vinci Partners
- Artesia Gestao de Recursos
- Bozano Investimentos
- Bridge Trust
- BRL Trust Investimentos
- BRZ Investimentos
- BTG Pactual
- DGF Investimentos
- Gavea Investimentos
- GP Investimentos
- Grupo Stratus
- Lions Trust
- Mantiq Investimentos
- Ouro Preto Investimentos
- Paraty Capital
- Patria Investimentos
- Rio Bravo Investimentos
- Tarpon Investimentos
- TMG Capital
- Trivella Investimentos
Also, have a look at Top 10 Private Equity FirmsTop 10 Private Equity FirmsPrivate equity firms are investment managers who invest in many corporations' private equities using various strategies such as leveraged buyouts, growth capital, and venture capital. The top private equity firms include Apollo Global Management LLC, Blackstone Group LP, Carlyle Group, and KKR & Company LP.
Recruitment Process Private Equity Firms in Brazil –
Even if Brazil’s private equity recruitment process is a lot similar to the recruitment process in the US and UK, there are few significant differences. Let’s have a look at them one by one.
- Pre-requisites to get in: If you’re currently looking for an opportunity, there’s good news for you. You don’t need to have anything glorious to get into Brazil’s private equity market. All you need to do is to be interested in the profile, and you should be willing to work hard as an undergraduate professional. Yes, Brazil’s private equity firms are always on a look-out for people who have just completed their graduation or in their final years. They interview people and hire them in junior roles. But not all private equity firms in Brazil will hire graduates. Some look for people who have previous experience in banking. As Brazil’s private equity market follows an unstructured model of the interview, it’s very difficult to pinpoint which structure they would follow in the next year. But usually either you have to be a graduate for junior roles, or you have to have banking experience to break into the private equity market in Brazil.
- Networking: Even if Brazil has a lot of private equity firms, but it’s not like the US. You will have lesser positions to apply to than the US. So what would you do? Your magic weapon is networking. And if you can do it intensively, you will be way ahead of the competition. All you need to do is to be clear what you want (i.e., private equity career) and have a word-to-word transcript to utter on the phone, email, or face-to-face conversation. Crafting a story is important because, without that, it would be impossible for you to remember everything spontaneously and impress a key person. For collecting contacts, you can check out your alumni network and find out who are employed in private equity markets. Then the rest is easy. Connect with them and tell your story. If your alumni network doesn’t work, then go to Linked-in and connect with strangers who have been working in Brazil and try to get in touch with them.
- Internships: If you’re a graduate and looking for private equity opportunities, it’s the best time to do a couple of internships. And especially if your school is not under the radar of a private equity firm, you must do internships to be able to get better exposure. And to get internships, networking is your best tool. Internships are generally from 3 months to 6 months. During these 3 to 6 months, learn as much as you can. And these internships experience will help you get an offer. Internships opportunity may not turn out to be a full-time opportunity always, but who knows?
- Interviews: As mentioned earlier, Brazil’s private equity firms take unstructured interviews, and every time the method changes. Usually, there are 3-4 rounds of interviews. And the structures of the interviews are similar to the US or UK, but the offer extension depends on the specific firm. Sometimes the offer is extended within 3 months, and sometimes it takes even more than 6 months. The first round of interviews is a “fit” interview. Then if you’re selected, then you will be meeting members of the team of that particular private equity firm. Ultimately you will be giving a case presentation, and then in the final round, you will be meeting with the MD and an HR representative who will do the ultimate bidding. And then if you’re selected, you will be given the offer. Now, as you don’t know when the offer would come, it’s better to explore more opportunities in the meantime. You need to be on a lookout for more opportunities because you don’t know how much it would take for the firm to make a concrete decision about you.
- Language & Entry barriers: If you want to make your mark in the Brazilian market, you need to know the local language, plus you also need to stay in Brazil. In most of the cases, native people go for junior roles. And foreigners usually try for senior-most positions. If you’re a foreigner, you need to know the native language, plus you also need to be fluent in English too. Because the interview can be in any language, and the members of the team can ask you to interpret a newspaper article written in the native language.
Culture in Private Equity Firms in Brazil
Brazil is a country for celebrations. But that doesn’t mean as a banker you would be having a lot of opportunities to relax and enjoy yourselves. No. You would be working a lot, at least more than normal 9 to 5 jobs. But, yes, you will be working lesser than those who work in the US or UK.
In most of the cases, you will be running for deals and trying to find better investment sources. As you will be part of a much smaller team, you will be able to get a lot of exposure early on. You will know everyone by their name and would be able to walk in MD’s office any time you want your query to get solved.
In large private equity firms, things are worse. You will need to work a lot more than small private equity firms, and there will be almost no social life whatsoever. But you will be getting a lot of opportunities to network and meet new people in professional gatherings.
Salaries of Private Equity Firms in Brazil
If you would look at the following screenshot, you will have an idea about the payment structure in private equity in Brazil.
Let’s have a look at the screenshot first –
From the above screenshot, it’s clear that if you start as an analyst, you will be earning quite good, in the range of BRL 171,000 to 306,000 per annum. Even with promotion, the hike is commendable, and the bonus is also excellent. No wonder private equity professionals earn a good amount of carried interest.
As a foreigner, you would have an issue if you don’t have prior experience because the competition with the native candidates would be too fierce.
Private Equity Exit Opportunities in Brazil
If you want to quit private equity, you have two options. But mostly no-one quits private equity as this industry offers a lot of growth and salaries.
However, if you decide to explore other opportunities, you can consider the following options –
- You can try applying to the investment banking industry. In Brazil, investment banking has been quite good (even if the investment banking revenue is going downward these days), and the working hours are also very reasonable.
- You can quit private equity and start your own business.
As a native, if you choose a top-notch school to study and get under the radar of top private equity firms, your professional life is set. Otherwise, you can network, do a couple of internships and then work your way up to a full-time opportunity. As a foreigner, you can apply to senior positions after having a few years of experience elsewhere; otherwise, there would be too much competition you need to go through at junior levels.
This has been a guide to Private Equity in Brazil. Here we discuss private equity in brazil in terms of the services offered, list of top private equity firms, recruitment, salaries, and job opportunities. You may learn more about financing from the following articles –