While private equity (PE) managers and investors seek opportunities outside of emerging markets and try to exit the investments they do have in these locations, Philadelphia headquartered Hamilton Lane is continuing its investment love affair with Brazil that originally began in 1997.
Private Equity News has reported on the closure of Hamilton Lane’s latest fund, dubbed a “fund of funds” as all of the money raised, $63.5million, is earmarked for direct investment in a number of Brazilian industry sectors.
Given that Brazil is one of the countries that is specifically being touted as an “avoid” or “exit now” market, this commitment from Hamilton Lane is a notable one, particularly as they opened their Rio de Janeiro office in 2011 when Brazil was still widely considered a huge opportunity. Kohlberg Kravis Roberts joined Hamilton Lane in the country when they took on a Sao Paulo headquarters in early 2013.
Part of the reason investors are deserting Brazil is because the opportunities that previously existed in real estate, property, and infrastructure development have petered out, but Hamilton Lane recognise that other industry sectors in the country are now looking good. The Private Equity News report earmarks a number of sectors that Hamilton Lane will be looking at with investment in mind, including healthcare, education, natural resource mining and supply, energy, and consumer goods.
Investment into such sectors is the natural progression when infrastructure has been established. While it is surprising that many PE firms don’t recognise the opportunity that Brazil can offer in these areas, its emerging market status means that there is still significant risk involved, particularly if a PE house has little knowledge of a particular location.
In the case of Hamilton Lane, with 17 years of success in Brazil behind them, they can confidently approach their investments in the country and have a great idea of what they should be looking to achieve.