Brazil's Rio Bravo Plans Fund for Investment in Northeast
Rio Bravo Investimentos, the Brazilian asset manager founded by former central bank President Gustavo Franco, is seeking to raise as much as 400 million reais ($203 million) for a fund that will invest in companies in the nation’s Northeast region.
“We are hunting for middle-size companies with fast growth,” Chief Investment Officer Paulo Bilyk, who started Rio Bravo with Franco in 2000, said in an interview in Sao Paulo, where the firm is based. “The Northeast is where we found a number of those companies with better quality at an interesting price,” said Bilyk, who helps manage 10 billion reais.
Private-equity firms are targeting the region as growth there outpaces the business hubs of Sao Paulo and Rio de Janeiro. Kinea, Darby Overseas Investments Ltd., Vinci Partners Investimentos Ltda. and Graycliff Partners LP are among firms that have purchased assets in the Northeast.
Kinea, the private-equity and asset-management boutique of Itau Unibanco Holding SA (ITUB4), agreed last year to buy a stake in Grupo Delfin, which has a network of medical diagnostics clinics in the northeast states of Bahia and Rio Grande do Norte. In September, Darby bought part of Dall, a food provider for offshore oil platforms in six northeast states. Vinci Partners and Graycliff also closed deals in the Northeast last year.
Rio Bravo, which has two funds already dedicated to the region, plans to invest in companies with revenue between 80 million reais and 300 million reais, private-equity manager Luiz Borges de Medeiros Neto said in an interview from Recife. The fund will target health-related industries, non-durable consumer goods, specialized retailers and infrastructure services.
The Northeast, which includes Maranhao, the country’s poorest state, represented 13.5 percent of Brazil’s gross domestic product in 2010, according to the most recent data available from statistics bureau IBGE. That’s up from 13 percent in 2002. Sao Paulo, Brazil’s richest state, accounted for 33.1 percent in 2010, down from 34.6 percent in 2002, while Rio de Janeiro, the second-richest, declined 0.8 percentage point to 10.8 percent in 2010.
Rio Bravo’s new fund will be managed by its office in Recife, where it has four employees.
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