Latin American Law & Business Report
Top Ten Trends for Latin Investment Funds
A February article in The Economist proclaimed Brazil “this year’s hot market for private-equity firms and hedge fund managers”. Brazil emerged relatively unscathed by the global financial crisis, and in terms of market size and political risk is proving attractive to investors such as Carlyle Group that had typically not focused on the country or the region in the past. Nor is Brazil alone. Legal reforms and GDP growth in Colombia and Peru, among others, have brought these markets to the attention of new investors seeking to form private equity, credit, hedge, infrastructure and real estate funds to capitalize on the expected growth of investment opportunities in the region. According to the Latin American Venture Capital Association, private equity funds raised a record high of $8.1 billion for Latin America in 2010, a 122%increase over 2009. At the same time, private equity investments quintupled on a year-over year basis to $17.2 billion. Assets under management by hedge funds also increased. For example, assets under management of Brazilian hedge funds increased 23% over the same period, to reach a total of $243 billion in that country alone. But no matter how experienced an investor may be in other markets, both forming a fund for making investments into Latin America and structuring such investments have unique challenges, as set forth in this article.