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Capital Markets

Latin America: European investors turn to LatAm private equity

Latin American private equity fund managers report an increase in interest from European investors. According to a survey of managers by KPMG, European institutional investors account for 13% of fund sources – in 2004 European investors had no presence at all. European investors are also becoming more prominent relative to US investors as the latter, having become a little more risk averse, are looking away from Latin America towards more established markets to make investments. US institutional investors are still the primary sources of funds, said 41% of respondents; in 2004, though, this figure was 49%.

The private equity market in Latin America appears to be becoming less attached to the US market. About 55% of managers are expecting some impact from the tighter credit environment in the US but only 21% think that impact will be significant. Some 8% go as far to say there will be little or no impact at all.

"Latin America private equity investors remain wary but apparently are not overly concerned about the effect of the US market, mainly because there is still good availability of funding for the small and medium-sized deals that comprise the bulk of their portfolios, and because sub-prime debt is not a factor in the region," says Jean-Pierre Trouillot, a Miami-based partner in KPMG’s transaction services practice.

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