Carlyle Joins Pantheon in Opening Colombia, Peru Offices

Private-equity firms including Carlyle Group LP, Pantheon Ventures LLP and Victoria Capital Partners LP are opening offices in Colombia and Peru to find deals as economic growth there outpaces Brazil’s.

Pantheon will open a Bogota office next month, said Jaime Londono, who will head the division for the London-based firm. Victoria, based in Buenos Aires, plans to have a local presence in Peru in about 18 months, managing partner Carlos Garcia said. Washington-based Carlyle opened a Lima office last year and is considering one for Colombia, said Fernando Borges, head of the company’s South American buyout team.

Peru’s economy expanded 6.3 percent last year after tripling in the past decade, and Colombia grew 4 percent, led by housing, retailing and mining. Growth was 0.9 percent in Brazil, which the Latin American Venture Capital Association said was the biggest recipient of private-equity investments in the region in 2012. Pantheon follows private-equity firms Advent International Corp., HarbourVest Partners LLC and Southern Cross Group, which set up Bogota offices in the past two years.

“In some Latin American countries such as Peru and Colombia you still have opportunities that aren’t available anymore in Brazil due to high valuations,” Patrice Etlin, a managing partner for Latin America at Advent, said in an interview in Sao Paulo.

Advent’s Deal

Advent opened its Bogota office in October 2011, and made its first investment there three months later. With demand for health care rising across Latin America, Boston-based Advent and Essex Woodlands Health Ventures acquired a controlling stake in Grupo Farmaceutico Biotoscana SA at the end of 2011 in a deal to help fuel the Colombian drug-maker’s growth into Mexico and Brazil. It was the first Latin American investment for Palo Alto, California-based Essex Woodlands, according to the firm. The value of the deal wasn’t disclosed.

Colombia received an investment-grade rating in 2011 for the first time in a decade as improved security bolstered economic growth. Standard & Poor’s raised its debt assessment one step to BBB on April 24, citing increased tax revenue and peace talks with rebels.

Private-equity investors looking to expand in Colombia and Peru are increasing, according to Cate Ambrose, the venture-capital association’s president.

The two countries accounted for 11 percent of private-equity deals in Latin America last year, up from a combined 10 percent in 2011, according to the venture-capital association. Peru posted the biggest increase in transactions, with 12 deals last year versus two in 2011. Brazil accounted for 62 percent of the market in 2012, up from 52 percent in 2011, the association’s data show.

Brazil Market

Because of its size, Brazil has more opportunities for bigger deals, Ambrose said in a telephone interview from New York.

“Colombia and Peru are attractive markets for private equity given their strong growth over the last few years, prospects for continued expansion and friendly business environment,” Victoria’s Garcia said in a telephone interview from Buenos Aires. “The size of their economies are also relevant,” Garcia said, adding that a local office helps in finding opportunities and overseeing them more closely.

Focused on investments in South America, Victoria manages two private-equity funds and co-investment funds with capital commitments of more than $1.5 billion. The buyout firm still has about $850 million to invest in companies with revenue of at least $75 million a year, according to Garcia.

Smaller Deals

Etlin at Advent said Latin American transactions outside Brazil generally offer smaller deal sizes, between $10 million and $100 million. Advent has a fund of $1.65 billion for Latin America and still needs to invest half of it, he said.

Carlyle raised $308 million for Peru in January and may invest in Colombia through its offices in Lima and Sao Paulo, Borges said.

“Our focus in Latin America ex-Brazil is Peru, where we have a team of four people that may increase until the end of the year,” Borges said in an e-mail, adding that Carlyle may open an office in Bogota, though not in the near term.

Carlyle teamed up with Credicorp Ltd., Peru’s largest financial-services firm, to find investments in health care, retail and consumer businesses, as well as mining, construction, infrastructure and education, according to a statement.

The firm, which hasn’t yet made an investment in Colombia or Peru, sees less deal competition in both countries compared with Brazil, where private-equity firms have been established longer.

“Colombia has a dynamic economy, a stable regulatory framework and a business-friendly environment,” said Pantheon’s Londono, who will share the Colombia office with an associate, Ana Maria Zarruk. He said the firm may expand the team should investment opportunities continue to increase.

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