Data & Intelligence

Building Vital Partnerships: How do private equity investors create value?

Download the full study here.

A joint study of private equity exits in Latin America by EMPEA and Ernst & Young

Our second annual study, looking at how PE investors create value in Latin American businesses, extends our research into PE’s transformational role in Latin America’s continued economic development. The results of this year’s study confirm our initial findings — PE firms are focused on growth and hands-on partnerships with entrepreneurs to transform companies into market leaders. Through extensive involvement, PE investors work with the entrepreneurs they back to identify and develop new products, expand geographically and exit profitably.

Our study looks at PE exits in Latin America between 2007 and 2012, a period of economic stability and prosperity unrivaled in a generation. In less than a decade, Brazil has surpassed the UK, Italy and Canada to become the sixth-largest economy in the world. In addition to Brazil, neighboring countries such as Colombia, Peru and Mexico have also come into the spotlight as the current rising stars of the region. This year, we’re seeing more PE interest in the region beyond Brazil.

Colombia and Peru have consolidated economic reforms to become hubs for foreign direct investment. And Mexico, long hindered by market concentration and low productivity in key sectors, is now pursuing serious structural reforms to bolster competition.

Latin America has continued to outpace developed countries in economic growth, with region-wide GDP growth averages hovering above 4%, despite a difficult commodity export market and continued challenges in generating competitive industries. To compensate for the drop in external demand, many economies in the region powered ahead, buoyed by the rapid growth of the region’s middle class and the local consumption effects of nearly 50 million people who have risen out of poverty in the last decade. This has had profound implications on certain sectors in countries where these trends are most prevalent, particularly in Brazil, Colombia, Mexico and Peru.

EMPEA has served as a useful reference platform for CDPQ by helping to define the eligible universe of fund managers in growth markets. Membership provides background data and a...

Rashad Kaldany | Executive Vice-President and Growth Markets, CDPQ

The developed markets have no equivalent to the role EMPEA is playing as a convener and source of trusted information in the emerging markets.

David Rubenstein | Co-Founder and Managing Director, The Carlyle Group