Private Equity in Brazil

Despite Brazil’s economic challenges, the private equity market in Brazil has constantly been making its way to the top. If you’re curious or ambitious about building a private equity career in Brazil, this article is for you.

In this article, we will explore all aspects of Private Equity in Brazil and will try to provide you with an accurate picture of Brazil’s PE market.

Let's get started, and here's the sequence of the article –

If you are new to Private Equity, then look at this comprehensive Private Equity overview.

In 2014, Brazil's economic scenario wasn’t very glorified to talk about. First, there was a corruption scandal, and then anxiousness & tension of presidential elections were added. As a result, Brazil couldn’t grow at all as an economy.

Despite no economic growth, Brazil's Private Equity market did significantly well. These private equity firms could receive $5.6 billion in new funds for investment in Brazil. If we compare the capital raised with the capital raised in 2013, we will see that there was almost a $2.3 billion increase in total capital commitment in 2014 than 2013.

The first half of 2015 wasn’t very rocky for private equity in Brazil (raised around $2.28 billion), but in the latter half, private equity firms in Brazil fell on their faces (raised only $900 million). This downfall is Brazil's former president Dilma Rousseff’s impeachment.  And the process went on for around nine months. In 2016, the first half didn't do well, but now the market has been recovering.

Private equity in Brazil may not be at its best as of now (especially when we compare the performance of the private equity market of Brazil in the year 2011 when the PE firms in Brazil raised over $8 billion in total capital commitment). Still, there is a silver line in the clouds as investors worldwide have been eyeing Brazil as an emerging market and gradually have started investing.

Brazil’s private equity firms provide a lot of services to their clients worldwide. We will have a look at the top services they offer and the approach they take to serving their clients –

• Buyout: One of the most important services private equity firms in Brazil provide is the service of the buyout. In a buyout, the private equity firms buy a sum of shares from a company to have a controlling interest. Then eventually, if the PE firm sees more growth, they try to influence the management to follow a certain protocol to generate better returns. And when the proposal doesn't seem beneficial, they go for an exit.
• Growth equity: This is another top-notch service offered by private equity in Brazil. They find companies in their mature stage and are looking for growth capital to finance their expansion. Then private equity firms in Brazil do their due diligence, and if everything goes right, they decide to invest in the companies. And as a result, they earn a good return at the end of the day.
• Carve-out: Carve-out is another name for partial divestiture. Private equity in Brazil finds out parent companies that want to go for partial divestiture. And then, these private equity firms assist parent companies in making the deal happen. Also, have a look at Spinoff vs. Split off.
• Public to private: This is another service that Brazilian private equity companies offer. They assist the public companies to sell out their stocks to become private. Private companies help these public companies to find sellers who are ready to buy the shares and become private once again. It is not always feasible for public companies to find sellers.

Brazil has a lot of great private equity firms. Not all of them have been performing them consistently. But some are. According to the Leaders League, few private equity companies maintain their standards and perform significantly well. Leaders League calls them "leading private equity funds of 2016". Have a look at them one by one –

• Angra Partners
• Vinci Partners
• Artesia Gestao de Recursos
• Axxon
• Bozano Investimentos
• Bridge Trust
• BRL Trust Investimentos
• BRZ Investimentos
• BTG Pactual
• DGF Investimentos
• Gavea Investimentos
• GP Investimentos
• Grupo Stratus
• Kinea
• Lions Trust
• Mantiq Investimentos
• Ouro Preto Investimentos
• Paraty Capital
• Patria Investimentos
• Rio Bravo Investimentos
• Tarpon Investimentos
• TMG Capital
• Trivella Investimentos

source: Leadersleague.com

Also, have a look at Top 10 Private Equity Firms

Even if Brazil’s private equity recruitment process is very similar to the recruitment process in the US and UK, there are few significant differences. Let’s have a look at them one by one.

• Pre-requisites to get in: There's good news for you if you’re currently looking for an opportunity. You don’t need anything glorious to get into Brazil's private equity market. All you need to do is be interested in the profile, and you should be willing to work hard as an undergraduate professional. Yes, Brazil's private equity firms are always looking for people who have just completed their graduation or are in their final years. They interview people and hire them in junior roles. But not all private equity firms in Brazil will hire graduates. Some look for people who have previous experience in banking. As Brazil's private equity market follows an unstructured interview model, it’s very difficult to pinpoint which structure they will follow next year. But usually, either you have to be a graduate for junior roles, or you have to have banking experience to break into the private equity market in Brazil.
• Networking: Even if Brazil has a lot of private equity firms, it's not like the US. You will have fewer positions to apply to than in the US. So what would you do? Your magic weapon is networking. And if you can do it intensively, you will be way ahead of the competition. You need to be clear about what you want (i.e., a private equity career) and have a word-to-word transcript to utter on the phone, email, or in face-to-face conversation. Crafting a story is important because it would be impossible for you to remember everything spontaneously and impress a key person without that. To collect contacts, you can check out your alumni network and find out who is employed in private equity markets. Then the rest is easy. Connect with them and tell your story. If your alumni network doesn’t work, go to LinkedIn and connect with strangers working in Brazil and try to get in touch with them.
• Internships: If you’re a graduate looking for private equity opportunities, it's the best time to do a couple of internships. And especially if your school is not under the radar of a private equity firm, you must do internships to get better exposure. And to get internships, networking is your best tool. Internships are generally from 3 months to 6 months. During these 3 to 6 months, learn as much as you can. And these internship experiences will help you get an offer. Internships may not always be full-time opportunities, but who knows?
• Interviews: As mentioned earlier, Brazil’s private equity firms take unstructured interviews, and every time the method changes. Usually, there are 3-4 rounds of interviews. And the structures of the interviews are similar to the US or UK, but the offer extension depends on the specific firm. Sometimes the offer is extended within three months, and sometimes it takes even more than six months. The first round of interviews is a "fit" interview. Then if you’re selected, you will be meeting members of the team of that particular private equity firm. Ultimately you will be giving a case presentation, and then in the final round, you will be meeting with the MD and an HR representative who will do the ultimate bidding. And then, if you're selected, you will be given the offer. Now, as you don’t know when the offer will come, it's better to explore more opportunities in the meantime. It would be best if you were on the lookout for more opportunities because you don’t know how much it would take for the firm to make a concrete decision about you.
• Language & Entry barriers: If you want to make your mark in the Brazilian market, you need to know the local language and stay in Brazil. In most cases, native people go for junior roles. And foreigners usually try for senior-most positions. If you’re a foreigner, you need to know the native language, plus you also need to be fluent in English. Because the interview can be in any language, the team members can ask you to interpret a newspaper article written in the native language.

Brazil is a country for celebrations. But that doesn't mean as a banker, you would have a lot of opportunities to relax and enjoy yourselves. No. You would be working a lot more than normal 9 to 5 jobs. But, yes, you will be working less than those who work in the US or UK.

In most cases, you will be running for deals and trying to find better investment sources. As you will be part of a much smaller team, you will be able to get a lot of exposure early on. You will know everyone by their name and will be able to walk into MD's office any time you want your query to get solved.

In large private equity firms, things are worse. You will need to work a lot more than in small private equity firms, and there will be almost no social life whatsoever. But you will be getting a lot of opportunities to network and meet new people in professional gatherings.

If you look at the following screenshot, you will have an idea about the payment structure in private equity in Brazil.

Let's have a look at the screenshot first –

source: yumpu.com

From the above screenshot, it’s clear that if you start as an analyst, you will be earning quite well, in the range of BRL 171,000 to 306,000 per annum. The hike is commendable even with the promotion, and the bonus is also excellent. No wonder private equity professionals earn a good amount of From the above screenshot, it's clear that if you start as an analyst, you will be earning quite good, in the range of BRL 171,000 to 306,000 per annum. Even with promotion, the hike is commendable, and the bonus is also excellent. No wonder private equity professionals earn a good amount of carried interest.

As a foreigner, you would have an issue if you don’t have prior experience because the competition with the native candidates would be too fierce.

If you want to quit private equity, you have two options. But mostly, no one quits private equity as this industry offers a lot of growth and salaries.

However, if you decide to explore other opportunities, you can consider the following options –

• You can try applying to the investment banking industry. In Brazil, investment banking has been quite good (even if the investment banking revenue is downward these days), and the working hours are also very reasonable.
• You can quit private equity and start your own business.

As a native, if you choose a top-notch school to study and get under the radar of top private equity firms, your professional life is set. Otherwise, you can network, do a couple of internships and then work your way up to a full-time opportunity. As a foreigner, you can apply to senior positions after having a few years of experience elsewhere; otherwise, there would be too much competition you need to go through at junior levels.

This has been a guide to Private Equity in Brazil. Here we discuss private equity in Brazil in terms of the services offered, a list of top private equity firms, recruitment, salaries, and job opportunities. You may learn more about financing from the following articles –

• Private Equity in Russia
• Private Equity in India
• What is Venture Capital?
• Private Equity in Hong Kong
• Culture of Private Equity in Saudi Arabia