GP Investments Ltd. (GPIV33), the private-equity firm founded by Brazil’s richest man, got $510 million for its No. 5 fund by selling two companies this month at almost triple the amount originally invested.
The fund said it will get $260 million for its 46 percent stake in Sascar Participacoes SA, which specializes in technology for recovering stolen cars, and $250 million for its 41 percent share of BR Towers SA, a mobile-phone infrastructure company. French tire-maker Michelin bought Sascar and Boston-based American Tower Corp. acquired BR Towers.
“We had two great exit opportunities in an election year that showed a lot of interest in Brazil from foreign companies in some key types of businesses,” GP Chairman Fersen Lambranho said in an interview this week. “Investors will get their money back and GP will get a positive impact on profits.”
GP’s transactions contributed to a 65 percent surge in merger deals in Brazil so far this year, which reached $28.6 billion, according to data compiled by Bloomberg. About $2.3 billion of the total involved private-equity funds, the data show. More foreigners are buying companies as valuations drop and Brazil’s currency declines, according to Marco Goncalves, head of mergers and acquisitions for Sao Paulo-based Grupo BTG Pactual.
The sale proceeds represent 2.6 times the value invested in the Sascar stake and 2.8 times the capital put into BR Towers, according to GP. Lambranho said the Hamilton, Bermuda-based company plans to raise funds for new investments. The No. 5 fund has $1.1 billion committed and about $710 million already invested, and GP has a total of $5 billion in committed investments.
“Most of our investors are endowments, pension funds, insurance companies, private banking and family offices from outside Brazil,” Lambranho said. The buyout fund is also trying to diversify into more regions and industries to reduce risk and attract investors, he said.
GP agreed to pay $33 million for a 27 percent stake in Swiss investment company Apen AG in a transaction announced May 21. The deal will help GP expand into emerging markets outside Latin America, as Zug-based Apen plans to invest in Asia and possibly Russia. GP is the biggest shareholder in the firm and has control of management. Apen has $450 million in assets, Lambranho said.
“Apen has the right to manage a fund listed in Europe that can invest in emerging markets all over the world and has a passive strategy, investing with other fund managers,” Lambranho said.
GP, the only publicly traded investment vehicle active in Brazil, was founded in 1993 by Jorge Paulo Lemann, who sold his stake in 2004 to executive partners including Lambranho. It now has 86 employees. Lambranho said future plans include taking stakes in real estate and infrastructure projects in Brazil.
“Regardless of who will be elected the next president, infrastructure and real estate will be a issue for the rest of our lives in Brazil, a country still to be built,” he said.
As of March 31, GP’s real estate fund had committed 330 million reais ($150 million), or about 132 percent of the total, in 20 projects.
“Our real estate fund invests in offices, logistics, commercial and residential,” and stays out of more expensive AAA-rated markets, such as those in Ipanema, Rio de Janeiro and Faria Lima in Sao Paulo, he said.
GP shares rose 16 percent this year through yesterday, compared with a 3.9 percent increase in the benchmark Ibovespa index. In the first quarter, GP reported profit of $1.6 million after an $83.8 million loss for all of 2013.