×

Private equity preps new Latin America push

Rio de Janiero, Brazil
Dado Galdieri | Bloomberg | Getty Images
Rio de Janiero, Brazil

Private equity and venture capital firms are setting up for more bets in Latin America after strong fundraising this year.

Some $3.5 billion earmarked for the region was collected during the first half of 2014, according to new data from the Latin American Private Equity & Venture Capital Association.

A host of major new funds hit the market this year, including regionally focused offerings from Blackstone Group partner Pátria Investimentos, JPMorgan Chase unit Gávea Investimentos, Advent International, and Carlyle Group. A total of 23 PE and VC funds reached their fundraising targets in the first half.

"This is a dynamic period for private equity fundraising and we expect year-end 2014 totals to likely reach $8 billion," LAVCA president Cate Ambrose said in a statement.

The previous high came in 2011, when a record $10.27 billion was raised.

Read MoreIs change about to sweep Brazil?

While fundraising was up, LAVCA data shows that investments slowed this year. PE and VC fund managers invested $2.57 billion through 93 transactions in the first half, a 10 percent decrease from the same period in 2013.

"Investments reached a six-year high in 2013, so it is natural that managers would focus their efforts on bringing value to portfolio companies and raising funds for future investments," Ambrose said.

Big deals include KKR and Bain Capital plays in Brazil, their first direct investments in the country (KKR acquired data center company Acquire Aceco TI and Bain bought health-insurance operator Intermedica). General Atlantic also bought Mexican pharmaceutical company Sanfer, and Carlyle acquired Peruvian security company Grupo Liderman.

"The region represents a large GDP with many pockets of growth and a new geography for KKR," Jorge Fergie, the private equity firm's head of Brazil and Latin America, said in an email.

Fergie said KKR is focused on healthcare, agriculture, and services in fast-growing economic sectors.

"LatAm is a very dynamic region, therefore we are continually reviewing updating and adapting our focus and themes," he added. "We are currently monitoring quite closely the impacts of the reforms in Mexico [and] the macroeconomic adjustments post elections in Brazil."

Information technology was the top sector for capital invested and the number of deals, according to LAVCA. IT attracted 30 percent of the total amount of industry investments. Healthcare was second, with 11 deals totaling $696 million.

Investment firms also made more money on Latin American deals in 2014. Proceeds from exits—a positive metric indicating when an investment is sold or brought public—increased by 7 percent year-on-year in the first half of 2014, with 12 divestments valued at $1.6 billion, according to LAVCA.

More than half of the total divestment proceeds were captured by Brazil, according to the group.

—By CNBC.com's Lawrence Delevingne.