Private Equity and Venture Capital Industry Performance in Brazil: 1990-2013

• Published in: The journal of private equity Vol. 17; no. 4; pp. 48 - 58
• Main Authors: Minardi, Andrea Maria Accioly Fonseca, Kanitz, Ricardo Vinicius, Bassani, Rafael Honório
• Format: Journal Article
• Language: English
• Published: London Institutional Investor, Inc 01.10.2014; Pageant Media
• Subjects: Access to information; Bias; Buyouts; Capital investments; Cash flow; Cash flow forecasting; Datasets; Emerging markets; Equity; Fair value; Financial investments; Financial services industries; Information sources; Internal rate of return; International finance; International organizations; Investment funds; Investments; Literature reviews; Pension funds; Private equity; Studies; Venture capital; Brazil
• ISSN: 1096-5572; 2168-8508
• DOI: 10.3905/jpe.2014.17.4.048

This article investigates the performance of Brazilian private equity (PE) and venture capital funds between 1990 and 2013. The Spectra-Insper database is used for information about gross returns and multiples. Investment amounts are collected from what General Partners report in Private Placement Memorandum or that are hand collected by the CVM (Brazilian Security Exchange Commission) or other commercial sources. The performance of 46 funds is analyzed. The average IRR of Brazilian funds is higher than the average of U.S. fonds over the same period. We observe that Brazilian fonds with vintage years between 1990 and 1997 underperform U.S. PE fonds on average, but those with vintage years between 1998 and 2008 outperform U.S. PE fonds. This pattern may reflect a learning curve in Brazilian PE industry. We find evidence that performance in Brazil has a higher cyclicality than in the U.S., but this may be due to the small sample size rather than the emerging market effect.